GST rate on royalty paid to obtain license for mining services

The AAAR held that the licensing services received by the applicant from the government shall be covered under the revised entry no. 17 (viii) of the notification no. 11/2017-CTR with the service description ‘Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viia) ” attracting GST @18% and has rejected the contention of the applicant for considering the said service in relation to leasing of goods falling under serial no. 17(iii), (iv), and (viia) of the notification no. 11/2017-CTR attracting GST rate of 5%. The AAAR held that recommendations of the 31st GST council meeting wherein new sub-clause (viia) was inserted did not indicate that the intention was to levy GST rate of 5% on the services received by the applicant. Furthermore, the reliance placed by the applicant on the Ruling in case of M/s NMDC wherein it was held that the applicable rate would be 5% as applicable for the supply of goods was rejected on the grounds that the said ruling was passed without appreciating the consequences of amendments made vide Notification 27/2018 dt.31.12.2018. It was also held that the advance ruling is binding only on the applicant and the jurisdictional officer and is not to be considered as binding precedent.