Question ID : 44721

063083

Please clarify whether DMF (District Mineral Fund) contribution made by mining companies (at rate of 30% of royalty) over and above royalty payment being made while dispatching minerals from mines shall be subject to GST under RCM as per Sl no-5 of Notification 13/2017 Central Tax (Rates) or shall be exempted from GST as per notification 12/2017 as services being provided by Governmental authority. In this regard it may be noted that the DMFT (District Mineral Fund Trust) has now been clarified as a governmental authority as per CIRCULAR-206/18/2023-GST and it has been clarified that they are eligible for the same exemptions from GST as available to any other Governmental Authority.

Answer ID : 85516

Recently the Hon’ble Supreme Court in the case of Mineral Area Development Authority overruling the previous judgment of India Cement held that Royalty is not a Tax. Therefore, any amount payable by the leaseholder to the State Government in lieu of mining concessions will be equivalent to consideration to the State Government. Therefore, GST is leviable on such considerations. Even though DMFTs are considered Governmental Authority therefore the DMF payments are also considered as Consideration Paid to Government. Hence liable for GST under RCM. ITC is invariable available for such RCM GST payments.

Answer ID : 85517

Please also check the Case Status bearing number CWP No. 8637/2023 in HP High Court; in the case of LAKHWINDER SINGH STONE CRUSHER, the Court ruled that the RCM GST is applicable to Royalty. Hence, the RCM GST is also applicable to DMF payments made to Authorities.

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