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2020 (7) TMI 352 - AAR - GSTClassification of supply - composite supply or not - supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant under the Contract - classified under Entry 9986 (ii) - Service of exploration, mining or drilling of petroleum crude or natural gas or both? - eligibility for concessional GST rate of 5% against an Essentiality Certificate (‘EC’) under Notification No. 50/2017-Customs dated 30 June 2017. HELD THAT:- The applicant is obligated to provide complete Mud Engineering and Drilling Waste Management Services. For provision of such services, it is essential to have all technical support (equipment/tools), technical personnel and required chemicals/additives. These components are clearly incidental and ancillary to main supply i.e. providing of mud engineering and drilling waste management Services for 3(three) HTHP Wells in KG Basin. If any one or more of these components is removed, the very nature of main supply i.e. provision of mud engineering and drilling waste management services would be affected. It also defeats the very purpose of the Contract and in such a scenario; there appears no service to be provided by the Applicant. Thus, the scope of the work to be provided by the Applicant under the Contract is a combination of supply of service and supply of goods which are naturally bundled in the ordinary course of business - wherein the principal supply is supply of service (mud engineering or drilling waste management services) and supply of goods viz. mud chemicals and mud additives which form incidental or ancillary supply to the principal supply. t is observed that for “Mud Engineering and Drilling Waste Management Services”, the scope of work was detailed under Section-II of the Contract. The said scope of work consists of ‘deployment of personnel (mud coordinator, Mud Engineer etc,)- Ref: Clauses 11.1 to 11.3 ‘Technical support (clause-17), Laboratory Equipment (clause-15), Logistics (clause-16). It is observed that though the contract is for ‘Mud engineering and Drilling waste management services’, the scope of work or the consideration for such services is not based on quantum or volume of the service. The scope of work under the contract encompasses the events viz. supply of technical personnel, technical equipment (on rental basis) and supply of additives/chemicals/consumables. Consideration receivable by the applicant is with reference to provision of such each event (reference to Section-HI of the Contract). Thus, all these components are not supplied or provided as a package at a single price. The supply of imported mud-chemicals and mud additives provided on consumption basis shall be classifiable as supply of goods under respective EISNs of goods as specified under CGST Act, 2017. Similarly, it is found that the other events supply of goods (on rental basis) and supply of services (supply of technical personnel) shall be accordingly classifiable independently under respective HSNs of Services/Goods as the case may be. Thus, the supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant under the Contract do not qualify as composite supply - question related to classification not applicable - The benefits under referred Customs Notification is available to supply of such goods at the time of their importation subject to fulfilment of description, tariff item, lists and conditions specified therein and subject to the satisfaction of the Proper Officer.
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