Case of Singareni Collieries Company Limited, AAR Telengana Ruling dated 2nd January 2026. Under the Mines and Minerals (Development and Regulation) Act 1957, the applicant is required to pay royalty to the State Government based on the quantity of minerals extracted. In addition, Section 9B mandates contribution of 30% of royalty to the District Mineral Foundation (DMF), and Section 9C mandates contribution of 2% of royalty to the National Mineral Exploration Trust (NMET). AAR ruled that royalty paid in respect of mining lease fell under tariff item 997337 and attracted GST at 18%. It further ruled that the same tax rate would apply to contributions made to DMF and NMET.
— The applicant contended that payments to DMF and NMET were in the nature of statutory contributions and not consideration. The appellate authority concluded that contributions to DMF and NMET formed part of the statutory payments connected with mining royalty and were not independent of the mining lease. However, CBIC Circular No. 206/18/2023-GST dated 31st October 2023 clarified that DMFTs qualify as Governmental Authorities and are eligible for the same GST exemptions as available to Governmental Authorities. The appellate authority partly allowed the appeal and ruled that GST is not applicable on contributions made to DMF with effect from the date of the order.