LNG re-gasification service converting customer's gas through temperature raising and pipeline delivery constitutes job work under GST at 12%

AAR Odisha ruled that the applicant's re-gasification service of converting customers' Liquified Natural Gas to Re-gasified LNG by raising temperature and delivering back through pipelines constitutes job work under GST. The activity satisfies all prerequisites as LNG belongs to GST-registered customers, processed goods are returned within one year, and LNG is classified as goods under HSN 2711. The service is classifiable under entry (id) of Heading 9988 at Sl. No. 26 of Notification 11/2017-CT (Rate) and chargeable to GST at 12%.

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Issues Involved:
1. Whether the Applicant's activity of re-gasification of LNG amounts to rendering of service by way of job work as defined under Section 2(68) of the CGST Act, 2017 and OGST Act, 2017.
2. If yes, whether the re-gasification service by way of job work is classifiable under Entry (id) of Heading No. 9988 of SI. No. 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended and eligible for GST at the rate of 12%.

Summary:

Issue 1: Whether the activity amounts to job work:
The Applicant, M/s. Dhamra LNG Terminal Private Limited, sought an advance ruling on whether their activity of re-gasification of LNG owned by its customers qualifies as "job work" under Section 2(68) of the CGST Act, 2017 and OGST Act, 2017. The Applicant receives LNG from customers, stores it, re-gasifies it into RLNG, and delivers it back to the customers. The definition of "job work" includes any treatment or process undertaken by a person on goods belonging to another registered person. The Authority confirmed that the Applicant's activity satisfies all pre-requisites for "job work" as it involves processing LNG (goods) owned by GST-registered customers and returning the processed goods (RLNG) within one year. Thus, the activity qualifies as "job work."

Issue 2: Classification and GST rate:
The second issue was whether the re-gasification service by way of job work is classifiable under Entry (id) of Heading No. 9988 at SI. No. 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended. The Authority referred to Circular No. 126/45/2019-GST dated 22.11.2019, which clarified that entry at item (id) covers job work services as defined in Section 2(68) of the CGST Act, 2017, and is exigible to GST at 12%. The Circular distinguishes between job work services under item (id) and other manufacturing services under item (iv). The Authority concluded that the Applicant's activity of re-gasification of LNG merits coverage under entry (id) of Heading 9988 and is liable to GST at 12%.

Ruling:
The Applicant's activity of re-gasification of LNG owned by its GST-registered customers amounts to rendering of service by way of job work and is classifiable under entry (id) of Heading 9988 at SI. No. 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended, and is liable to GST at 12%.

Appeal:
The Applicant or jurisdictional officer, if aggrieved by the ruling, may appeal to the Odisha State Appellate Authority for advance ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the advance ruling.

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