TaxTMI 
TaxTMI 
2026 (7) TMI 354
X X X X Extracts X X X X
X X X X Extracts X X X X
....AAACA7359P1ZF has filed an application for advance ruling under Section 97 of CGST Act, 2017 and Section 97 of the OGST Act, 2017 in FORM GST ARA-01 discharging fee of Rs. 5,000/- each under the CGST Act and the SGST Act. 1.0 The Applicant has sought ruling in respect of the following question: (a) Whether GST paid under reverse charge mechanism on mining royalty is eligible to be considered as Input Tax Credit for the purpose of refund under inverted duty structure under Section 54(3) of the CGST Act, 2017? (b) Whether mining royalty, being a statutory payment intrinsically linked to extraction of minerals, can be treated as differently from ordinary input services for the purpose of refund calculation under Rule 89(5)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cluding royalty, resulting in accumulation of Input Tax Credit due to inverted duty structure. 2.5 The Applicant has accumulated Input Tax Credit (ITC) arising primarily from GST paid under reverse charge on mining royalty. Under Section 54(3) of the CGST Act, refund of unutilized ITC is allowed in case of inverted duty structure. However, Rule 89(5) of the CGST Rules prescribes the formula for refund of accumulated ITC and restricts refund primarily to input goods, which has created ambiguity in cases where ITC arises from statutory payments such as mining royalty. 2.6 The issue is further complicated by judicial interpretations including the judgment of the Hon'ble Supreme Court in Union of India vs. VKC Footsteps India Pvt. Ltd....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te of tax on inputs is higher than the rate of tax on output supplies. The objective of this provision is to prevent blockage of working capital and maintain tax neutrality in the GST regime. 2.11 In the Applicant's case: a. GST is paid under RCM on mining royalty b. Granite blocks are sold at a lower GST rate c. This leads to genuine accumulation of ITC Denial of refund results in permanent blockage of working capital, which is contrary to the fundamental design of GST as a consumption-based tax system. 2.12 There exists significant ambiguity in the interpretation of Rule 89(5) in cases involving statutory payments such as mining royalty. The Applicant therefore seeks a ruling from this Hon'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aised in the application are covered by Section 97(2) of the CGST/OGST Act, 2017 and are therefore admissible for determination under the Advance Ruling mechanism. 5.2 The term Advance Ruling under Section 95 of CGST Act, 2017 is defined as follows: (a) "advance ruling" means a decision provided by the Authority or the Appellate Authority [or the National Appellate Authority] to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 [or of section 101C], in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; Further, Section 97(2) prescribes The question on which the advance ruling is sought under t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing a ruling on the questions as enumerated in the provision under Section 97(2) of CGST /OGST Act, 2017. Though the Applicant has used the expression "Input Tax Credit" in the questions framed, the substance of the application pertains to refund entitlement and refund computation under Section 54(3) and Rule 89(5). The expression appearing in Section 97(2)(d), namely "admissibility of input tax credit", relates to the availability or eligibility of ITC under the provisions of Chapter V of the CGST Act. The Applicant is admittedly availing credit of GST paid on mining royalty under reverse charge mechanism and does not seek determination of whether such credit is available under Sections 16 of the Act. 5.5 The dispute raised concerns whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r decided in any proceedings in the case of an applicant under any of the provisions of this Act: Provided further that no application shall be rejected under this sub-section unless an opportunity of hearing has been given to the applicant: Provided also that where the application is rejected, the reasons for such rejection shall be specified in the order." 5.7 From the above provision of law, this Authority finds that the question raised in the present application has already been decided by the jurisdictional tax authority in proceedings under Section 54 of the CGST/OGST Act, 2017 concerning the applicant's refund claim. In view of the proviso to Section 98(2) of the CGST Act, 2017, this Authority is also barred ....