Liability to RCM in case where Power of attorney is given.

This query is : Resolved

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This discussion clarifies GST liability for RCM on mining royalties when a Power of Attorney is granted. While the mine owner (X) is the legal owner and technically liable for the royalty payment, the agreement states the operator (Y) bears all costs, including taxes. The consensus is that the owner (X) should account for the RCM GST, but to facilitate input tax credit for the operator (Y), sales could be shown in Y's name, allowing Y to claim the credit before selling to a third party.

Chartered Accountant

Chartered Accountant (Querist)
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04 April 2025 One of my client named X is a legal owner of a marble mines he has sublet his mines to Y, since subletting is not legally allowed in mining laws he has given power of attorney to Y for operating the mines, now the mining owner has to pay royalty to government and GST on RCM basis on royalty at 18%, both X & Y are registered under GST, all the legal expenses and tax will be borne by Y as per their agreement now my question is:
Who is liable to deposit GST on RCM basis X or Y?
I think the correct contention is that X should deposit the GST on RCM basis but as Y is paying the tax out of his pocket he would always want the input so X should show sales in the name of Y so that he can get the input and Y further sell it to 3rd party or Can Y directly pay RCM on royalty?