We party is a civil engineering contractors, executing works for railways. They are using soil for embankment, though they have not taken any lease from mining authorities, however as per rules royalty is payable on extraction of soil. They are not paying royalty directly, but the railways is recovering the amount of royalty due from their bills and depositing this to revenue authorities.
The soil extracted is being used in works which are chargeable to the GST. Is the contractor liable to pay GST under RCM on royalties paid by the railways on account of the work, executed by them, which is charged to GST on the full value, including the royalty amount.
Please guide,
Is the
Civil engineering contractor questions GST liability under RCM for royalty on soil extraction without mining license. A civil engineering contractor working for railways inquires about the liability of paying GST under the Reverse Charge Mechanism (RCM) on royalty charges for soil extraction. The contractor does not hold a mining license, and the railways deduct the royalty amount from their bills and pay it to the authorities. Responses suggest that GST on royalty is typically payable by the mining lease holder under RCM, not by contractors without a mining license. There is ongoing litigation and uncertainty, with some authorities insisting on GST payment under RCM despite contractors providing supporting documents. (AI Summary)
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