TaxTMI 
TaxTMI 
2020 (4) TMI 235
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....ake it clear that the provisions of both the CGST Act and the Goa GST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the Goa GST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/ GGST Act would be mentioned as being under the "GST Act". 3. M/s. Cosme Costa and Sons, a partnership firm having their registered office at Altinho - Mapusa, Faira Alita, Bardez, Goa -403507 (hereinafter referred to as 'the applicant') are registered under the provisions of the GST Act and hold GSTIN No. 30AABFC0743K1ZZ. The applicant are engaged in the business of extraction and sale of iron ore from GAVAL SONSHI MINE located at Pissurlem Village in North Goa, Sattari Taluka spread over to an extent of 61.7430 hectares of land bearing Sy. No: 41 covered under the Mining Lease TC No. 110/1953. The operations conducted in relation to the extraction include the activity of raising excavating, stacking of iron ore and delivering the extracted crude iron or....
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.... the view that the Royalty on extraction of iron ore is subject to GST @ 5% (2.5% CGST and 2.5% SGST) till 30.12.2018 and thereafter @ 18% (9% CGST and 9% SGST) SUBMISSION ON CONTRIBUTION TO NMET FUND: 4.2 The applicant submitted that the activities carried out by NMET is not a 'supply' in relation to the operation of the applicant and that activities of the trust are totally independent and has neither any relation with the business of the applicant nor provide any value-addition or even a basic reciprocity to the activities of the applicant at all. The contribution made to the fund is not a consideration to 'supply' but only a statutory payment mandated by the law, failing which the applicant wouldn't be allowed to carry out mining and extraction activities. The applicant submitted that as per Section 7 of the GST Act of 2017, "supply" includes - (a) All forms of supply of goods or services or both such as sale, transfer, barter, exchange, licensee, rental, lease or disposal made for a consideration by a person in the course or furtherance of business." It is to be noted that liability to pay GST will arise only if all the following conditions are satisfied: i. There must ....
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....reciprocal obligations for supply and unilateral acts, or any resulting payment of damages cannot be encompassed into supply. The applicant further argued that in a recent CBIC circular, where the issue of levy of GST on the service of display of name in the premises of charitable organisation receiving donations was clarified, the Board has clarified that where the recipient is under no obligation (quid pro quo) to do anything in return of donation or gift, there is no GST liability on such receipt. Evidently, it can be inferred that where there is merely some payment and no reciprocal activity/ service/ goods is supplied, the payment wouldn't be considered to be made against a 'supply' and no GST would be leviable on such payments. Artificially, interpreting such activities as 'supply', merely because there is a consideration, being a unilateral act, would tantamount to superfluous interpretation of the law. A prerequisite is that the supply and the payment of consideration thereof must have reciprocity with each other. Consideration could be monetary or a non-monetary consideration. In respect of contribution to DMF Fund and GMOPFT fund, the applicant has made submission simila....
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.... and Regulation) Act, 1957, which reads as under: "The holder of a mining lease granted shall, notwithstanding anything contained in the instrument of lease or in any law in force at such commencement, pay royalty in respect of any [mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee] from the leased area after such commencement, at the rate for the time being specified in the Second Schedule in respect of that minerals". 7.1 The Central Board of Indirect Taxes and Customs (CBIC) in Sectoral FAQ's has clarifies that the royalty payment is made towards Licensing services for exploration of natural resources. The extract of the same reproduced as under: "The Government provides license to various companies including Public Sector Undertakings for exploration of natural resources like oil, hydrocarbons, iron ore, manganese, etc. For having assigned the rights to use the natural resources, the licensee companies are required to pay consideration in the form of annual is license fee, lease charges, royalty, etc. to the Government. The activity of assignment of rights to use natural resources is treated as supply of services and the licens....
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....nsideration in course or furtherance of business. The applicant also contests that DMF, GMOPFT and NMET are trusts which shall be a non-profit body and as per Section 9C(2) of the MMDR Act, the objective of the trust shall be to use the funds accrued to the Trust for the purposes of regional and detailed exploration in such manner as may be prescribed by the Central Government. Further, Rule 9(1) of the National Mineral Exploration stipulates that: "The Trust shall carry out regional and detailed exploration for mineral and it shall undertake such activities as may be deemed necessary by the Governing Body to achieve its objects including: (a) funding special studies and projects designed to identify, explore, extract, beneficiate and refine deep-seated or concealed mineral deposits; (b) undertaking studies for mineral development, sustainable mining, adoption of advanced scientific and technological practices and mineral extraction metallurgy; (c) taking up exploration of areas for regional and detailed exploration, giving priority particularly to strategic and critical minerals; (d) ........... (e) ........... From the above it may be seen that the activities/ functi....
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....f 30% of royalty to District Mineral Foundation, DMF (Constituted on State level) , 10% of sale proceeds to Goa Mineral Ore Permanent Fund Trust (GMOPFT) and 2% of Royalty to National Mineral Exploration Trust (NMET). 'These contributions to the said trusts are on account of their mining operations being carried out. This mining gets covered under "any other similar activity, whether or not it is for a pecuniary benefit" as specified under (a) above as also under the activity for furtherance of their trade specified under (g) above. There is no ambiguity that M/s. Cosmc Costa pays royalty for its business of iron ore extraction and also pays to the said trusts i.e. DMF, GMOPFT and NMET in the course of furtherance of their business only. By no stretch of imagination, the contributions paid the said trusts can be treated as donation. In case of failure to contribute to the above trusts, the business/ rights of iron ore extraction would legally get hampered and terminated. Whereas, donations are always of voluntary nature here in the instant case there is a compulsion to make payment to the said trusts in proportion to the amount of royalty and sale proceeds. Thus there hardly remain....
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....ability to pay GST on royalty paid to the Goa Government and amount paid to the Funds, Section 2(98) of the GST Act, 2017 stipulates that "reverse charge" means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub-section (4) of Section 5 of the Integrated Goods and Services Tax Act; Further, Reverse Charge Mechanism is applicable for certain notified services as mentioned in the Notification No. 13/2017 -Central Tax (Rate) dated 28.06.2017. As per Sr. No. 5 of the said Notification, ser-vices supplied by the Central Government, State Government, Union Territory or Local Authority to a business entity attracts GST under reverse charge basis. 9.1 As regards the rate of GST on the said supply (Royalty and amount paid to the Funds) the services of "Licensing services for the right to use minerals including its exploration and evaluation" are covered under entry No. 17 of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. On careful perusal of the notification it may be seen that the said services a....