Royalty paid to Government-Mining

[vikash YADAV]

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.

AI Summary

Reverse charge liability on mining royalty turns on who holds the mining lease, not who makes payment.
GST liability under reverse charge is discussed for royalty paid to the Government for mining rights. The commentary states that the grant of mining rights is treated as a supply of service, royalty is considered consideration for that supply, and the mining lease holder is the recipient liable to discharge GST even where another entity pays the royalty on its behalf. It also notes that third-party payment does not shift the reverse charge burden.