In re Petrofac International UAE LLC (GST AAAR Rajasthan)
Question 1 – Whether the services provided by the applicant are classified under Sr. No. 24(ii) (Heading 9986) of the Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017 (as amended) as ‘Support services to exploration, mining or drilling of petroleum crude or natural gas or both’ and attracts GST @ 12%
Answer: Based on the analysis of activities, the Appellant are required to carry out in pursuance of the EPC Contract and keeping in view the true nature of supplies proposed to be undertaken by the Appellant, the proposed supplies are appropriately classifiable under SAC Heading No. 9954 answering to description ‘Construction Services’ which are in the nature of composite supply defined as works contract.
Question 2 – Whether the services provided by them are classified under ‘Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both’ under Sr. No. 21 (ia) (Heading 9983) of the Notification No. 11/2017 – Central Tax (Rate) dated 28.06.2017 (as amended) and attracts GST @ 12%.
Answer: The proposed supplies are specifically covered by SAC Heading No. 9954 and the claim that ‘Construction Services’ of SAC Heading No. 9954 is a general description of the supplies and ‘support services’ of SAC Heading No. 998621 is more specific to describe the proposed supplies is not supported by the EPC Contract as discussed above.
Question 3 – Further, if the subject services are not classified under the aforesaid entry, what would be the appropriate classification for the same and at what rate GST would be imposable.
Answer: The proposed supply is covered by the scope of ‘Construction Services’ of SAC Heading No. 9954 and neither the inclusions given under SAC Heading No. 998621 for Support Services nor the description of Heading 9983 covers the scope of the proposed supply, Hence, the claim for classification under SAC Heading No. 998621 or alternatively under Heading 9983 is not sustainable. The proposed supplies, therefore, attract tax at the rate of 9% in terms of item (xii) of entry at SI. No. 3 of Notification No. 11/2017-CT (R), dated 28.06.2017 as amended and 9 % in terms of Notification issued under the RGST Act, 2017.
FULL TEXT OF THE ORDER OF AUTHORITY FOR APPELLATE ADVANCE RULING, RAJASTHAN
M/s Petrofac International (UAE) LLC (hereinafter referred to as “PILL” or “Petrofac” or “Contractor” or “Appellant”) and their parent company is reportedly a leading international service provider to the energy industry, with a diverse client portfolio including many of the world’s leading energy companies. PILL is involved in designing, building, for the energy industries in Africa, CIS, India & Middle East.
2. The Appellant are registered under the Central Goods and Services Tax Act, 2017 (‘CGST Act’) having Registration Number 08AAJCP8925H1ZY.
3. Vedanta Limited (“Vedanta”) is engaged in the business of exploration and mining of various natural resources. The Appellant have informed that Cairn (Vedanta’s upstream Oil & Gas Division) is the operator of onshore RJ-ON-90/1 block located in Barmer District in the state of Rajasthan. This block contains 38 major Oil & Gas discoveries, with significant gas potential in the southern area. Raageshwari Deep Gas (RDG), discovered in 2003, is a tight gas field situated in the southern area of the block and is under production since 2010 with significant infrastructure in place. Its Gas Processing Terminal is known as Raageshwari Gas Terminal (RGT)
4. With a view to further augment facilities and infrastructure for enhancing the development of the RDG field in order to maximize the resource monetization with cost optimization, Vedanta Limited awarded the Engineering, Procurement and Construction (“EPC Contract” or “Contract”) to the Appellant for Provision of Services for Development of Integrated Gas Surface Facilities.
5. SCOPE OF WORK – AUGMENTATION OF FACILITIES & INFRASTRUCTURE UNDER RDG PROJECT
Under tire RDG Project, the Appellant are required to undertake various activities as under:
a) Augmentation of Well Pads and Well Fluid Gathering Pipelines
b) Augmentation of Existing Gas Processing Terminal capacity with New RDG Gas Processing Terminal
