GST ON ROYALTY UNDER RCM

[Sadanand Bulbule]

Dear experts

It is admitted fact that GST on royalty is to be paid under RCM by Mining Lease holders. However in few districts of Karnataka, mining activities have been fully controlled by the Monitoring Committee appointed by the Hon'ble Supreme Court. As such they are under the obligation to strictly follow the terms and conditions imposed by such committee. One of the conditions is such mining lease holders have to pay Royalty, Forest Development Cess and GST directly to the committee and in turn it would remit it to the respective Government departments.

The question is since the mining lease holders have already paid GST on royalty under "Forward charge mechanism [FCM]", the GST Authorities are fastening once again tax liabiIity under RCM despite bringing to their knowledge the said legal position.

What is the remedy for such double liability? Explore the solutions.

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

GST \was rightly collected by the Developer for construction service from the members before OC was received. Your query is confusing. What is your issue is not properly explained here.

[Manoj Thakur]

Please read notifications 3 to 6 of 2019. Its available on TMI. Developer is not recovering any construction service charges, valuation is on first sale to independent buyer closest to commencement of project, so its open market rate abated by 33%.

After 1.4.2019 society transfers land rights to developer for redevelopment attracts GST too. So that could be triple taxation.

[KASTURI SETHI]

Dear Sir, 

In this context, the following case law is worth reading :-

2024 (10) TMI 271 - KARNATAKA HIGH COURT - BANGALORE ELECTRICAL SUPPLY COMPANY LIMITED (BESCOM) VERSUS THE ASSISTANT COMMISSIONER OF CENTRAL TAX NORTH DIVISION -1 BENGALURU, THE ASSISTANT DIRECTOR OF DGGI DIRECTORATE GENERAL OF GST INTELLIGENCE MANGALURU.

[Sadanand Bulbule]

True Sir.

But the authorities need to be generous and impartial enough to recognize the ratio of such judicial rulings. They are endangered species.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

 Sir, Nobody is above law whether assessee  or law enforcing officer.  

[UPENDRA PANDYA]

Respected Sir,

I am also facing the similar situation. I would like to get some help. My question is Can we claim back the Input tax Credit on RCM of Royalty for minerals paid to government , here in GSTR-3B table for the current Filing period? (For F.Y. 2024-25). I.e. we are here paying the RCM on royalty in table 3 of GSTR-3B we are giving information for RCM of 18% on Royalty for the month and at the same time we are adjusting or treating it as ITC in table no. 4 of GSTR-3B return. against Sale of minerals (5% gst rate)? Since we will be Is it allowable legally as per rules?

Because if I remember correctly, as per the last judgment passed by the Honorable court , has mentioned that refund cannot be claimed back for inverted rate structure. under this case.

I would be happy to receive the Guidance.

AI Summary

GST on royalty: double charging under forward and reverse mechanisms raises challenge to validity and remedies are available.
Royalty on minerals may be taxed twice: as part of sale value under the forward charge mechanism and under reverse charge for government services granting right to use minerals. An apex-court ratio described royalty as consideration tied to immovable property and led to an interest waiver for taxes paid on royalty before a cutoff. Recommended remedies include contesting notices by citing the judgment, pursuing statutory appeals or writs, and making representations to the GST Council; questions remain about claiming input tax credit for RCM-paid royalty.