TaxTMI 
TaxTMI 
2026 (2) TMI 576
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....on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the APGST Act, 2017. 3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The applicant attached copies of challans as proof of payment of Rs. 5,000/- each for CGST and SGST through Electronic Cash Ledger Reference Nos. DC3709250113526 dated 22.09.2025, and DC3709250113526 dated 22.09.2025 respectively, towards the Advance Ruling fee. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. 4. Brief Facts of the case: M/s Sudhakara Infratech Private Limited, (here in after referred to as SIPL or the contractor) intends to participate in the ERCC tender floated by the Directorate of Mines & Geology, Government of Andhra Pradesh, for collection of seigniorage fee, contributions towards DMF and MERIT, in accordance with the provisions of the Andhra Pradesh Minor Mineral Concession (APMMC) Rules....
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....ns regarding GST liability of the contractor are as follows: Clause 8.6(g): The word "taxes" also covers GST on knocked - down amount/contract amount in addition to the knocked-down amount. Applicable GST shall be paid by the bidder and proof shown for the respective monthly payments. Clause 10.3(b): The knocked-down amount is exclusive of GST, Stamp Duty, and other charges/levies. Clause 10.3(c): The contract is taxable under RCM (Reverse Charge Mechanism); GST compliance is with the contractor. Clause 11.2(c): The contractor shall pay the applicable GST on both the amounts collected from the leaseholders and the knocked-down amount as per law, and shall file GST returns with the concerned Departments regularly as per the terms and conditions of GST rules and other applicable rules/ procedures. These conditions lack proper clarity considering the prevailing GST law and relevant notifications issued by CBIC from time to time. 5.5 The tender also stipulates that the contractor shall be liable to pay GST under Reverse Charge Mechanism (RCM) on the contract amount. However, vide Notification No. 14/2018-CT (Rate), dated 26-07-2018, Entry 65B was insert....
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....t such statutory levies on behalf of the Government and ensure compliance by leaseholders. SIPL acts in the capacity of a collecting agent, not as the supplier of mining rights. The privity of contract for the supply of mining rights is directly between the Government and the lease holders, who are legally entitled to receive this service and obliged to make payment of royalty/seigniorage. SIPL is not a party to this transaction. Applying the legal maxim nemo dat quod non habet ("no one can give what they do not have"), SIPL cannot be treated as the provider of mining rights when it has not been vested with such rights by the Government. Accordingly, in terms of Entry 5 of Notification No. 13/2017-CT (Rate), the liability to discharge GST on royalty/seigniorage fee lies on the mining lease holders under Reverse Charge Mechanism (RCM). SIPL is not liable to pay GST under forward charge on the amounts collected from lease holders. 7.2 Applicant's View on Question 2 (a) Mineral revenues Corresponding to the quantities consumed by Government departments/ corporations/ local bodies: * When works contractors execute projects for Government departments, seigniorage fe....
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....understanding: • The supply of mining rights is between the State Government and the mining lease/quarry holders, who are liable to pay royalty and discharge GST on it under RCM (Notification No. 13/2017-CT (Rate)). • The ERCC (i.e., SIPL) is only assigned the collection function, which is explicitly exempt under Entry 65B, subject to the above condition. • At the end of the contract, SIPL will certify that the GST paid by mining lease holders on royalty is not less than the GST exempted. If there is a shortfall, SIPL will pay the difference as per the proviso. Therefore, the service supplied by the State Government to SIPL by way of assigning the right to collect royalty is exempt from GST under Entry 65B, subject to compliance with the condition specified therein. 8. Personal Hearing: The applicant was provided with an opportunity of Personal Hearing on 08.10.2025. On that day, Sri G. Srinivas, and Smt. M.B. Vijaya Lakshmi, Chartered Accountants and the authorized representatives of applicant appeared and reiterated the submissions made by them while filing the application for Advance Ruling and submitted copies of- i) Gove....
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....ollect royalty" assigned to the ERCC contractor by the State Government. This decision was aimed at preventing double taxation on the same underlying supply of service (grant of mining rights) and ensuring that total tax on royalty collection is correctly aligned with Entry 65B conditions. The Council further recognized that the service supplied by the State Government to the ERCC (assignment of right to collect royalty) remains exempt to the extent of GST already paid by the mining lease holders under RCM Method, and that the ERCC is liable only for any differential GST arising at the end of the contract period. 9.3 Relevance to the Applicant's Case In the Applicant's case, the tender conditions issued by the Directorate of Mines & Geology require payment of GST on the knocked-down amount, creating ambiguity vis-à-vis the exemption available under Entry 65B. The above GST Council deliberation confirms that the Applicant, acting as an ERCC, is responsible only for reconciling and paying the difference in GST, if any, between: • GST paid by mining lease holders on royalty under RCM, and • GST applicable on the consideration (knocked-do....
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....oceedings. 10.2 The conditions prescribed in the tender documents so far as relating to the liability of GST are as under: Clause 7: Reserve Price 7.1 The Reserve Price of the Sector is INR 337,00,00,000/- (INR Three Hundred Thirty Seven Crores Only). 7.3 The revenues are estimated to reflect the Seigniorage Fee rates applicable as on the date of issue of this tender notification. 7.4 The Reserve Price is inclusive of Seigniorage Fee, DMF, MERIT for all minor minerals except Sand and is exclusive of GST, Stamp Duty and any other applicable charges/ taxes/levies. Clause 8: Declaration of Successful Bidder and grant of Seigniorage Fee Collection Contract 8.6 (b) Payment of the First Instalment for an amount equal to one monthly instalment of 24 equal monthly instalments of the entire knocked down amount of contract period of 2 year [Knocked down amount of total contract period of 2 years * (1/24)] (f) Bidder should pay all costs related to stamp duty and other statutory charges/taxes/levies, as applicable. (g) The word taxes also cover GST on knocked down amount/ contract amount in addition to the knocked down....
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....ments regularly as per the terms and conditions of GST rules and any other rules and procedure in vogue. (d) Comply with all statutory provisions and shall indemnify the State Government against all liabilities, costs, expenses, damages, and losses (including but not limited to any interest, penalties, and legal costs) arising out of or in connection with breach or non-compliance with applicable laws. 11.3 Book Adjustments (a) The leaseholders shall obtain free transit forms for dispatch of minor minerals to Government and NHAI works as per APMMC Rules. (b) The free transit forms issued for Government works and NHAI Works shall be considered by the Assistant Director/ Deputy Director concerned, as the case may be, to estimate the book adjustments, with due reconciliation with the concerned Engineering Departments monthly. (c) The book adjustment amounts shall include Seigniorage Fee, contribution towards DMF & MERIT for all the minor minerals and revenue (excluding penalty and interest) received under slab system. 11.5 Other Conditions (a) The Contractor shall collect Seigniorage Fee, contributions towards DMF & MERIT through OMEPS....
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.... instalment schedule and book adjustments do not alter the character of the Knocked Down (KDA) Amount as the contractual consideration. In terms of Notification No. 13/2017-Central Tax (Rate), Sl. No. 5, when the Government supplies services by way of grant of mineral rights or assignment of collection rights to a business entity, the recipient is liable to discharge GST under the Reverse Charge Mechanism (RCM). Thus, the SCC contractor, as the recipient of the service, is required to pay GST on the full Knocked Down Amount (KDA) under RCM. Registration under Section 24(iii) is mandatory for such recipients. The time of supply is governed by Section 13 of the CGST Act, depending on the earlier of the date of payment or entry in the books of account. However, the services supplied by the State Government to an Excess Royalty Collection Contractor (ERCC), by way of assigning the right to collect royalty on behalf of the State Government, is specifically covered under Entry 65B of Notification No. 12/2017-CT (Rate), inserted by Notification No. 14/2018-CT (Rate) dated 26.07.2018. * Entry 65B (as inserted) reads: "Services supplied by a State Government to Excess R....
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....if any, is already discharged by the relevant parties - * In the case of Government works, the works contractors discharge GST on the full contract value, including the seigniorage component, under forward charge. * In the case of private quarry lease holders, the lease holders are already liable to pay GST under RCM on royalty. In such adjustments, part of the Knocked Down Amount is neutralised through book adjustments for Government works and these amounts have already suffered GST by the respective Govt works contractors and the Mining Lease Holders. Such, liability on adjusted amounts will be treated as discharged if there is: • Proof of GST payment by the works contractor (invoice, IRN/QR code, GSTR filing proof). • Monthly certification by the executing department confirming GST paid on the seigniorage component. • Exact quantity match between adjustment claims and GST-paid quantities. • Correlation between the month of adjustment and the month of GST payment. Therefore, these book adjustments are mere internal financial settlements and do not represent any new or independent supply of service by SIPL....