- Broad Son Commodities Pvt. Ltd. entered a lease for sand mining in Bihar and was required to pay GST on royalty.
- The company believed a 5% GST rate applied under reverse charge and sought confirmation on the rate and classification.
- The Advance Ruling Authority determined the correct GST rate was 18%, supported by specific notifications and circulars.
- The Petitioner challenged this ruling in the High Court of Patna.
- The court referred to a Supreme Court judgment, affirming that royalty is a contractual consideration, not a statutory tax.
- The court held that royalty payments are subject to GST as they are consideration for mineral rights.
- The High Court upheld the 18% GST rate on royalty payments as valid and constitutional.
Source: taxand.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
