TP A has obtained lease hold rights from the Government (Collector/Mining Department) to excavate boulder stones. Entity B has entered into an agreement with A to crush these boulders into pebble stones and sell them to construction companies. Under the same agreement, Entity B is also paying the mining royalty to the Government on behalf of Entity A.
In this arrangement, which entity is liable to discharge GST on the mining royalty under the Reverse Charge Mechanism (RCM)?
As on date neither A nor B is paying the same.
Reverse charge mechanism: which party must discharge GST when a contractor pays government mining royalty on another's behalf? A lessee holds leasehold rights to excavate boulders while a contractor crushes and sells pebble stones; under their agreement the contractor pays the government mining royalty on behalf of the lessee. The operative question is whether GST on that royalty is payable under the Reverse Charge Mechanism and which party-the leaseholder or the contractor-bears the obligation to remit GST, noting that currently neither party is remitting tax. (AI Summary)
TaxTMI 
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