The Authority for Advance Ruling (AAR), Andhra Pradesh ruled in a recent decision that the supply of Stone-crusher units (Aggregates) manufactured using Boulders sourced from quarries are liable to Goods and Services Tax (GST) of 5%. The current Application seeking an Advance Ruling was filed by M/s R.V. Minerals, a manufacturer of stone-crusher units (aggregates) constructed using boulders extracted from quarries by mining companies, namely, Pranathi Metals and Pavithra Metals. The aforementioned mining companies conduct operations on quarries leased from the Government of Andhra Pradesh and supply the extracted boulders to the Applicant, levying 5% GST under HSN 251710. The Applicant, while supplying the manufactured Aggregates follows the same procedure and issues tax invoices levying 5% GST. Meanwhile, the Applicant also levies 18% Royalty Charges on their customers by virtue of Royalty Charges claimed by M/s Sudhakar Infra, a collecting agency authorized by the Government’s Mining Department to receive Royalty from the leaseholders of mining quarries in the districts of East Godavari and Dr. B.R. Ambedkar Konaseema. The levy of 18% Royalty charges and 5% GST were vehemently opposed by the Applicant’s customers who refused such tax burden and demanded that only 5% GST be levied on the entire consideration paid by them to the Applicant. P. Ramesh, Chartered Accountant appearing for the Applicant submitted before AAR that both, the Royalty Charges and GST on supply of Aggregates are mutually exclusive and cannot cascade each other as a ‘composite supply or a mixed supply’ on the basis of Section 2 of the Central Goods and Services Tax Act, 2017 (CGST Act). The Coram of Authority for Advance Ruling (AAR), Andhra Pradesh comprising members K. Ravi Sankar, Commissioner of State Tax and B. Lakshmi Narayana, IRS, Joint Commissioner of Central Tax after perusing the material on record, observed that the Royalty Charges and Applicable GST are rightly collected separately by the Applicant and cannot be clubbed together for the purpose of taxation. The Coram further made reference to Paragraph 9 of Circular No.164/20/2021-GST dated 06.10.2021 issued by the Central Board Of Indirect Taxes & Customs to reiterate that the phrase “same rate of tax as applicable on supply of like goods involving transfer of title in goods” does not apply to mining rights. In light of the observations, it was ruled by the Andhra Pradesh AAR that the Supply of Aggregates manufactured from the boulders is classified under HSN Code 251710 and would attract 2.5% CGST and 2.5% SGST, while keeping open the window for an Appeal under Section 100 of the Andhra Pradesh GST Act, 2017.