There are various steel manufactures and coal mining firms that have outreached to their respective legal experts to look into options to challenge the current government diktat to tax opening royalty and license fees within the Goods and Services Tax (GST) framework.
Recently when the meeting was held the government has informed that any royalty or license fees paid to the state should charge 18% Goods and Services Tax.
Latest Update in Mining Under GST
7th December 2021: The supreme court of India has published a notice on 2 summons challenging the 6th October circular which is ordered by the Indian government that pay 18 per cent GST on services on mining operations in India. Read more
“The services by the way of grant of mineral exploration and mining rights attracted a GST rate of 18% with effect from July 1, 2017, the government clarification said.”
According to the present regulations, mining firms pay license fees to the state government and pay unless royalty yearly or based on conditions set and agreed previously. The concern was either GST is relevant to a service that the government is providing.
These services were privileged from indirect taxes 
These types of taxes paid on Consumption by the consumer but they do not pay directly to the government (unlike income tax). For example, GST, Sales Tax, VAT, Custom Duty and Octroi Tax within the recent tax management, say, industry trackers.
Tax experts are asking Is using rights or any legal authority or license showed by the government to a firm is taxable. Legal experts say this is set to appear in a legal battle.
“The clarification will have to cross the test of constitutional validity because something which is not taxable under the statute cannot be clarified to be taxable. The statutory levies paid to the government should not be subject to tax in absence of the ‘quid pro quo’ mentioned by Tax experts.
Towards the government’s decision in court, some of the organizations are seeking to challenge it by availing that it is the backdated clarification. There is no firm that has furnish any case towards the concern however it might be executed in the upcoming weeks. The government has specified that GST must be liable to pay from 1st July 2017. This implies that the firms must need to pay the GST for the previous 4 years.
There are various coal and steel firms that need to file the taxes from 2017 that shall restrict the flow of cash along with the profits for the companies.
Besides that, the mining firms need to file the GST along with that some of the steel industries also need to come under the compliances of filing the taxes.
According to the GST platform the ITC must be available upon the cost. But the issue will be available on the GST which is filed since 2017.
The ITC is normally the GST which is filed on raw materials that could be the major reason for the future tax liability of a specific type.
