In re Bharat Petroleum Corporation Ltd. (GST AAR Gujarat)
Bharat Petroleum Corporation Ltd. (BPCL), involved in the refining and marketing of petroleum products and the re-gasification of Liquefied Natural Gas (LNG), sought an advance ruling from the Gujarat Authority for Advance Ruling (AAR) regarding the Goods and Services Tax (GST) implications of its LNG re-gasification services for GAIL (India) Ltd. BPCL has an existing agreement with Petronet LNG Ltd. (PLL) for re-gasification, under which PLL performs job work on LNG owned by BPCL. This arrangement had previously been confirmed as a job work by the Gujarat AAR in PLL’s case, attracting 6% CGST. BPCL’s new agreement with GAIL involves BPCL undertaking the responsibility for re-gasifying LNG owned by GAIL, with the actual re-gasification performed by PLL under BPCL’s direction. Crucially, the title to the LNG and re-gasified LNG (RLNG) remains with GAIL throughout this process.
BPCL contended that its arrangement with GAIL constituted a “back-to-back” job work. They argued that they were responsible for ensuring PLL undertook the job work for GAIL, GAIL paid BPCL job work charges, and the ownership of LNG/RLNG never transferred to BPCL or PLL. BPCL sought confirmation that their service of re-gasification would be classified as job work under Section 2(68) of the CGST Act, 2017, and would be taxable at 12% under Serial No. 26(id) of Notification No. 11/2017-CT(Rate). The AAR, after reviewing the agreements between BPCL and PLL, and BPCL and GAIL, along with relevant circulars and definitions of “job work,” concluded that BPCL’s activity indeed qualified as job work. The Authority observed that BPCL pays PLL for re-gasification services and that the ownership of the LNG remains with GAIL.
