Page 111 - GSTL_30th April 2020_Vol 35_Part 5

2020 ] IN RE : COSME COSTA & SONS 597
8.4 Further, the activities carried out by DMF, NMET and GMOPFT are
squarely covered under the clause (i) of the Section 2(17) of the GST Act, 2017
which enumerate “any activity or transaction undertaken by the Central Government,
a State Government or any local authority in which they are engaged as public authori-
ties” in the definition of the “business”.
8.5 The applicant in their contention has argued that the DMF, NMET
and GMOPFT, all the three Trusts have been constituted under the provisions of
Mines and Minerals (Development and Regulation) Act, 2017 and both the trusts
could not be treated as State Government or Central Government authority. In
this regard, Section 2(69) of the GST Act, which defines “Local Authority”, is to
be examined. As per the said provision “Local Authority” means :
(a) a “Panchayat” as defined in clause (d) of Article 243 of the Constitu-
tion;
(b) a “Municipality” as defined in clause (e) of Article 243P of the Con-
stitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board and any other
authority legally entitled to, or entrusted by the Central Government or
any State Government with the control or management of a municipal or
local fund;
(d) …….
(e) …..
The NMET has been constituted by the Central Government and the DMF and
GMOPFT have been constituted by the Goa Government under the provisions of
‘Mines and Minerals (Development and Regulation) Act, 1957 with the objective
of management of “Local Fund”. Therefore, these are covered under the defini-
tion of the “Local Authority”. It has already been held that the activities carried
out by the said trusts are in relation to the ‘business’ and the same are classifiable
under SAC Code No. 997337 which covers “Licensing services for the right to use
minerals including its exploration and evaluation”. There is no ambiguity that
Royalty and contribution to funds are made for applicant’s mining business. By
no stretch of imagination, it can be treated as donation. These contributions are
statutorily mandatory and not voluntary. Applicant will not get legal rights to
extraction which is the reciprocal for these contributions which in case of failure
to contribute gets hampered.
9. As regards liability to pay GST on royalty paid to the Goa Govern-
ment and amount paid to the Funds, Section 2(98) of the GST Act, 2017 stipulates
that “reverse charge” means the liability to pay tax by the recipient of supply of goods or
services or both instead of the supplier of such goods or services or both under sub-section
(3) or sub-section (4) of Section 9, or under sub-section (3) or sub-section (4) of Section 5
of the Integrated Goods and Services Tax Act;
Further, Reverse Charge Mechanism is applicable for certain notified
services as mentioned in the Notification No. 13/2017-Central Tax (Rate), dated
28-6-2017. As per Sr. No. 5 of the said Notification, services supplied by the Cen-
tral Government, State Government, Union Territory or Local Authority to a
business entity attracts GST under reverse charge basis.
9.1 As regards the rate of GST on the said supply (Royalty and amount
paid to the Funds) the services of “Licensing services for the right to use minerals
including its exploration and evaluation” are covered under Entry No. 17 of the No-
tification No. 11/2017-Central Tax (Rate), dated 28-6-2017. On careful perusal of
GST LAW TIMES  30th April 2020  111