QUESTION
i am a partnership firm having business of mining stones and crush stones. for the same i have bee given license from the state government. against that license we pay royalty to state government. my question is do we need to pay any GST on reverse charge basis for the royalty paid. if yes then what shall be the rate on which we are liable to pay the GST on reverse charge.
 

ANSWER
Law Applicable:
Notification No. 13/2017 CT (Rate)
 

5

Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, -
(1) renting of immovable property, and
(2) services specified below-
(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers
 

Central Government, State Government, Union territory or local authority

Any business entity located in the taxable territory


Interpretation:
As State Government is providing you the license for mining stones and crush stones, thus as per entry no. 5 of the Notification No 13/2017-CT (Rate), dated 28.06.2017 you (the recipient of services) are liable to discharge the tax liability on reverse charge basis. The same decision is also given by Haryana Authority of Advance Ruling in case of M/S PIONEER PARTNERS, Rajasthan Authority of Advance Ruling in case of Vinayak Stone Crusher, Chattisgarh Authority of Advance Ruling in case of M/s NMDC Limited. The same are enclosed for your reference.

So far as rate of tax is concerned it is covered under Heading 9973 and taxable at the rate applicable on supply of like goods involving transfer of title in goods till 31-12-2018 vide S.no.17(viii) of Notification No 11/2017-CT (Rate) but w.e.f. from 01-01-2019 it is taxable @ 18% as amended vide Notification No 27/2018-CT (Rate).

Conclusion:
You are liable to pay tax under reverse Charge at the rate applicable on supply of like goods involving transfer of title in goods till 31-12-2018 vide S.no.17(viii) of Notification No 11/2017-CT (Rate) but we from 01-01-2019 it is taxable @ 18% as amended vide Notification No 27/2018-CT (Rate).