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2022 (4) TMI 184
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....83 stating "Other professional, technical and business services", of Notification No. 11/2017- C.T. (Rate) dated 28.06.2017, as inserted vide Notification No. 20/2019-C.T.(Rate), dated 30.09.2019 since the said amendment is clarification to the amendment made vide Notification No. 1/2018-CT.(Rate) dated 25 January 2018 reducing G5T rate for service of exploration, mining or drilling of petroleum crude or natural gas or both to 12% At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT: 2.1 Lloyds Register Consulting Energy Private Limited, the applicant, located at 63 - 64, 6th Floor, Kolpataru Square, Kondivita Lane, Off Andheri - Kuria Road, Andheri (East), Mumbai 400059 is engaged in the business of providing Technical Consult....
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....ds as per clause 4 'PMC Activities' of the contract entered with Cairn includes Project Management, Functional Assurance and Field support. 2.7.2 Project Management includes planning, Project Monitoring & Support & Cluster Management details of which are mentioned in the application. Planning function includes preparing detailed project plan, ensure that the some is implemented within agreed timelines, to undertake critical path analysis independently & recommend opportunity to crash schedules, leverage synergies & corrective actions / catch up plans, etc. Project Monitoring & Support includes monitoring & managing overall project progress i.e. applicant's team will monitor, track, report project progress and cost, ensure governance, report project exceptions, manage project risk, have periodic meeting with Execution contractor, etc., to assist Cairn. Cluster Management includes ensuring that the ground level activities for each cluster is executed on time as per plan and issues/risk are resolved with the key stakeholders, provide mitigation strategy & alternate plan in case of a delay, Managing the on field team to ensure efficient resource utilization and interactions. 2.7.....
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....-- 2.9 Notification No. 11/2017 provides for a table which lists down the essential details based on which the classification of a particular service has to be made. Column 2 provides a four digit heading along with the broad coverage in brackets; column 3 provides for the description of the exact service which needs to be classified; column 4 for the rate at which CGST is payable and column 5 provides the conditions subject to which the given rate of CGST in column 4 is applicable. In order to classify a particular service, the first thing which has to be determined is the 4-digits heading as provided in column 2. Once the said service falls in the 4-digits heading then, the corresponding description provided in column 3 has to be looked at. If the description matches with the service being provided, then the service gets classified under that particular entry, attracting the corresponding rate mentioned in column 4 as per the conditions as prescribed in column 5. Further, Code Wise List of Services annexed to Notification No. 11/2017 (supra) ("SAC List of Services") provides for 5- and 6-digits bifurcation of the heading mentioned in column 2 of the table provided in Notificat....
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....ncy Services in relation to oil and natural gas exploration to Cairn: 2.12 In GST, oil & gas sector is outside the ambit. Thus, no credit is available of GST paid on inputs availed by such companies. With an intent to reduce the impact the GST on their procurements, Government has provided/ continued certain benefits even in GST regime. For example, on import, BCD exemption continues and concessional rate of Integrated Goods and Services Tax (IGST) at 5% is applicable on import of goods for oil and gas exploration operations. 2.13 Notification No. 03/2017 - CTR dated 28.06.2017, provides for concessional rate of GST at 5% effective rate) for intro state supply of goods to projects relating to exploration of oil and natural gas. Notification No. 03/2017 - ITR dt 28.06.2017 provided the said concessional rate for inter state supplies. Vide Notification No. 31/2017 - CTR dated 13.10.2017, effective rate of GST ed to 12% for composite supply of works contract and associated services in respect of offshore works contract relating to oil and gas exploration and production in the offshore area beyond 12 nautical miles from the nearest point of the appropriate base line. Further, wit....
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....Further in line with the aforesaid judgment, services being rendered by Applicant to Cairn should be covered under Entry 21(ia) of Notification No.11/2017 (supra) which is a more specific entry more when the activities being rendered by the Applicant gets clearly covered under the explanatory notes provided for various sub-headings under SAC 9983. 2.16 The below table captures relevant excerpts from the explanatory notes in one column along with the corresponding scope of work from the contract which gets covered by such explanatory notes. Relevant portion of the Explanatory Notes Relevant portion of the contract 998311 Management consulting and management services including financial, strategic, human resources, marketing, operations and supply chain management This service code also includes providing advice, guidance and operational assistance concerning business policy and strategy and the overall planning, structuring and control of an organization. More specifically, general management consulting assignments may deal with one or a combination of the following: i. policy formulation; ii. Determination of the organizational structure (decision m....
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....ot delayed. Scope of work for cluster management includes but not limited to: 4.2.1 Drilling Services The Drilling engineers as part of PMC shall be responsible for collaboration with Integrated Services Execution Contractors to deliver the wells and overall drilling campaigns with zero or minimum environmental impact, and in compliance with all the Statutory, Regulatory, COMPANY standards, policies & guidelines and relevant API guidelines and industry best practices. 4.2.2 Petroleum Engineering Services 4.2.3 Surface Engineering Services Scope of work for surface engineering services includes but not limited to: 4.2.4 FDP • Validation of FDP concept including various concepts/ plans for processing & evacuation, field architecture & field layouts, products evacuation methods, sequencing of development (integrated/ phases), provision of artificial lifting methods, etc. • Validate results of FEED/Pre-FEED studies • Review and validate all three parts of FOP document (except G&G services): • Part A which shall be the detailed technical assessment report ("TAR") for the commercial development of the field â....
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....plicant was represented by Authorized Representatives Shri. Mihir Deshmukh, Advocate, Shri. Rajendra Apte, and Shri. Kirti Oswal, Partner. Jurisdictional officer Smt. Nilima Dhamanaskar, Superintendent, Division V, Mumbai-East was also present. The Authorized Representatives made oral submissions with respect to admission of their application. 4.2 The application was admitted and called for final e-hearing on 26.11.2021. The Authorized representative of the applicant Shri. Swarup Chingale, CA, Shri. Ruturaj Chingale, CA and Shri. Sunil Bhosale, PCSCL were present. Jurisdictional officer was absent. Applicant was asked to provide details of agreement dates, work order details and dates, dates of starting of work with copies of work order and details of completion of works till today and details regarding tax treatment being adopted by applicant with copies of invoices. 05. DISCUSSIONS AND FINDINGS: 5.1 We have perused the documents on record, and have taken into consideration, both oral and written submissions, made by the applicant. The jurisdictional officer has neither attended the final hearing nor has made any submissions tilt the date of passing of this order. 5.2 ....
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....n/programs submitted by Execution Contractor and make recommendation to VL on all decision points ; Review Completion basis of design documents in coordination with the Petroleum Engineers and validate individual well programs, cementing program, etc. ; Review and monitor daily drilling operations and ensure timely submission all daily deliverables. Review third party rigs/ tangibles/ vessels inspection report, endurance test report, rig equipment inspection reports, equipment testing reports, acceptance and closeout reports, other petroleum engineering services, etc. Details of the scope of work as per the contract are mentioned in the application. 5.6 We find that, as a part of such project management consultancy services, the Applicant is required to manage the Projects right from the detail design to commissioning and is also required to review, monitor, manage and control all aspects of the execution of the Projects. Applicant will perform its activity using its independent and self-sufficient team, on behalf of VL, to complete the projects with quality, on time and within the approved cost. Thus, applicant has been appointed as a Project Management Consultant to manage and....
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....both. 6 (ii) Other professional, technical and business services other than (i) and (ia) above. 9 5.12 From the scope of work mentioned above, we find that the applicant is providing various kinds of professional and business services to VL. The term "business" has been defined under Section 2 (17) of the CGST Act, has a very wide connotation and includes:- (a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other Similar activity, whether or not it is for a pecuniary benefit; (b) Any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) Any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; .............................. 5.13 The definition of the word 'business' under the CGST Act, covers within its ambit, a wide range of activities and includes administrative, consulting and management services, etc. Entry (ia) of Si. No. 21 of Rate Notification, inserted vide Notification No. 20/2019 - CTR dated 30.09.2019 appears to have been introduced by the Government to classi....
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....n of geological, geophysical and geochemical anomalies; surface geological mapping or surveying; providing information on subsurface earth formations by different methods such as seismographic, gravimetric, magnetometric methods & other subsurface surveying methods This service code does not include - test drilling and boring work, cf. 995432 998343 Mineral exploration and evaluation This service code includes mineral exploration and evaluation information, obtained on own account basis Note: This intellectual property product may be produced with the intent to sell or license the information to others. 3.2 The relevant Explanatory Notes for Heading 9986 are as follows: 998621 Support services to oil and gas extraction This service code includes derrick erection, repair and dismantling services; well casing, cementing, pumping, plugging and abandoning of wells; test drilling and exploration services in connection with petroleum and gas extraction; specialized fire extinguishing services; operation of oil or gas extraction unit on a fee or contract basis This service code does not include: - ge....
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....e not covered by the said Explanatory Notes since the service code 998341 is restricted to Geological and geophysical consulting Services and the service code 998343 is restricted to Mineral exploration and evaluation Services and the impugned services being provided by the Applicant cannot be considered as being connected to either Geological and geophysical consulting services or Mineral exploration and evaluation services. 5.17 In view of the above it is held that the impugned services are not covered under Sr. No. 21 (ia) of Notification 11/2017 - CTR dated 28.06.2017 as amended by Notification No. 20/2019 - CTR dated 30.09.2019 (SAC 9983). 5.18 In the subject case even though the impugned services consist of professional, technical and business services, the same are not covered under SAC 9983 (Sr. No. 21 (ia)), as discussed above. Therefore, the said professional, technical and business services supplied by the applicant are clearly covered under the residual Entry No. 21 (ii) of Notification 11/2017 - CTR dated 28.06.2017 as amended, attracting tax rate of 18%. 5.19 In view of the above discussions, we find that the impugned services supplied by the applicant to VL ....