SC stays GST on royalty paid by petitioner to state for mining rights

The Supreme Court has stayed the imposition of GST on royalty paid mining rights given to a  petitioner.

GST at the rate of 18 per cent is imposed on royalty given to the state governments for mining rights.

While the rate schedule was earlier amended to impose GST on this royalty from January 1, 2019, the tax research unit of the Central Board of Indirect Taxes and Customs (CBIC) recently clarified that the tax would also be applied from July 1, 2017 and December 31, 2018. GST came into force on July 1, 2017.

Abhishek Rastogi, partner at Khaitan & Co, said any order by the Supreme Court on the issue would also have ramifications on other sectors such as casino and telecom, where GST is imposed on the license fee.

"Royalty paid to the state government for mining rights is a statutory levy and accordingly the question of applicability of GST is subject to judicial review as there is no quid pro quo for the payment," he said.