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.

Answer ID : 85840

Since DMFT (District Mineral Fund Trust) has now been clarified as a governmental authority as per CIRCULAR-206/18/2023-GST and since it has also been clarified that they are eligible for the same exemptions from GST as available to any other Governmental Authority, the DMF collected by DMFT will not be exigible to GST. Reference in this regard may be brought to the notification 12/2017 sl no-4- Services by governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution and sl no-5-Services by a Governmental Authority]8 by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution. Further if we refer to the circular, it is found that DMFT has the same objective as defined under article 243W and 243G of the Constitution (in the circular the activities of DMFT are activities as mentioned under Eleventh Schedule andTwelfth Schedule of the Constitution) and if we refer Eleventh Schedule and Twelfth Schedule of the Constitution it mention all the activities as mentioned under article 243W and 243G of the Constitution. Therefore, in the above background, I am of the opinion that follwing the circular and notification 12/2017, since the services by DMFT are exempted from GST, GST levy can not arise on RCM basis on the payment of DMF to DMFT by the lessee of mines.

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