2026-VIL-14-AAR
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SGST Advance Ruling Authority

GST - Andhra Pradesh AAR - Taxability of services supplied by State Government to Excess Royalty Collection Contractor (ERCC) and GST liability on royalty/seigniorage fees collected from mining lease holders - Applicant intends to participate in a tender floated by the Directorate of Mines & Geology, Government of Andhra Pradesh, for collection of seigniorage fee, District Mineral Foundation (DMF), Mineral Exploration and Research & Innovation Trust (MERIT) and other statutory mineral levies from quarry lease holders, under the Excess Royalty Collection Contract (ERCC) model - Whether SIPL/Contractor is liable to pay GST under forward charge on amount of seigniorage fee, consideration amount collected from the quarry/Mining lease holders or whether the Quarry/Mining Lease holders pay the GST under RCM on such seigniorage fee etc. – HELD - The activity of granting mining rights is a supply of service by the State Government to the quarry/mining lease holders, and GST on royalty/seigniorage, DMF, MERIT or any similar statutory levy is liable to be discharged by the mining lease holders under Reverse Charge Mechanism in terms of Notification No. 13/2017-CT (Rate). The applicant, as the ERCC contractor, is not liable to pay GST under forward charge on the amounts collected from lease holders - the GST liability of the applicant as the ERCC contractor shall be limited to the differential GST, if any, between the GST paid by mining lease holders on royalty under RCM and the GST applicable on the consideration (knocked-down amount) paid by the applicant to the State Government – Ordered accordingly - Taxability of the revenues book adjusted to the Contractor /SIPL by the Director of Mines & Geology on monthly basis – HELD - The book adjustments are merely settlement mechanisms under the ERCC contract and do not constitute a separate supply by applicant. The GST, where applicable, is already discharged at the appropriate stage by the relevant parties - Whether services supplied by a State Government to Excess Royalty Collection Contractor (ERCC) by way of assigning the right to collect royalty is liable to GST – HELD - The services supplied by the State Government to an Excess Royalty Collection Contractor (ERCC) i.e. the applicant, 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, and is exempt from GST subject to the condition that the ERCC maintains proper records and certification at the end of the contract period as stipulated in the said notification.
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