In re Halliburton Offshore Services Inc (GST AAAR Andhra Pradesh)
The Import and subsequent supply to ONGC on consignment basis i.e on approval basis are two distinct Supplies as prescribed under the Customs Act and GST Acts.
The appellant has not disputed the Ruling to the extent that the transaction of import and subsequent supply to ONGC are two distinct transactions i.e. Distinct supplies as prescribed under the Customs / GST Acts. Thus the decision of the impugned order with regard to the import of drill bits for supply to ONGC at its location in India on consumption basis involves two supplies namely, Import into India of drill bits; and Indigenous movement from the port of import to ONGC’s location is upheld..
The main contention on behalf of the appellant is that the case fell within the language of the two notifications, one for import of drill bits into India under serial no. 404 of Notification No.50/2017- Cus. Dt: 30.06.2017 and another for indigenous movement under Notification No.3/2017- Central Tax (Rate) dated 28 June 2017 under the IGST/CGST Acts respectively. There is no requirement to obtain Two separate Essentiality Certificates from the same Authority i.e., Director General of Hydrocarbons one at the time of import and another for Interstate, Intra State supply of the same under the GST Laws, to entitle him for claiming exemption/concession rate of Tax under both the enactments.
The appellant relied on several judgements of the Honourable courts in support of his contention. The Judgements relied by the appellant are different from the present case. The appellant relied on the judgements related to Classification, inclusion/exclusion of goods under Excise Tariff manual and applicability of exemption notifications, to the similar line of trade, etc., under the Customs and Excise Tariff enactments of the Central Government. The present issue relates to requirement of Essentiality Certificate for claiming concessional rate of Tax /exemption under different Tax Authorities for distinct and different supplies involved i.e. one at the time of import under Customs and another during the course of local sale/supply under Central and state enactments.
In the case of Innamuri Gopalan v. State of Andhra Pradesh, [1963] 2 SCR the Honourable Supreme Court held that the State was “possibly right in the submission that the object behind the framers of the notification was to avoid double taxation but he operation of an enactment or of a notification has to be judged not by the object which the legislature or the notifying authority, as the case may be, may have had in mind but by the words which it has employed to effectuate the legislative intent”.
In view of the above discussions, it is concluded that The Essentiality certificates prescribed under the said two notifications have to be furnished separately to avail the benefit of the said notifications.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH
(Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act, 2017).
At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the APGST Act.
The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and APGST Act”] by M/s. Halliburton Offshore Services Inc. (herein after referred to as the “Appellant”) against the Advance Ruling No. AAR NO.07/AP/GST/2020 dated 25.02.2020 Authority for Advance Ruling, Andhra Pradesh.
1. Brief Facts of the Case:
1. The appellant is engaged in supply of comprehensive range of oilfield related services such as drilling services, exploration and mining related services, etc. to oil exploration and production companies across the globe.
2. One of the goods supplied by the appellant in the course of supplying drilling services is drill bits. Drill bits are cutting tools used to remove material to create holes of circular cross -section in the extraction of natural gas, or petroleum, for the injection of a fluid from surface to a subsurface reservoir.
3. The appellant was awarded a contract by ONGC to supply drill bits on consignment basis i.e. sale on approval basis at ONGC’s twelve different locations based on the call out orders received from ONGC.
4. Pursuant to the above, the Appellant imports drill bits and avails the benefit under Sr.404 of Notification No.50/2017- Cus. Dt: 30.06.2017. Subject to satisfying the conditions at Sr. No. 48, i.e. on filing the Essentiality certificate obtained from the Director General of Hydrocarbons, Noida. Accordingly the Appellant pays total customs duty at the rate of 5% i.e., Basic Customs Duty (‘BCD’)-0% + Integrated Goods and Services Tax (“IGST”)-5% on the specified Goods.
5. In terms of entry at serial no.404 of Customs Notification, a concessional rate of Customs duty (BCD-NIL and IGST-5%) is prescribed for specified goods mentioned in List 33, required in connection with petroleum operations undertaken under petroleum exploration License or Mining Leases granted by the Government of India to ONGC. The drill bits are mentioned at serial no. 7 of List 33 in the Customs Notification.
6. The appellant charged and deposited GST at the rate of 18% under the HSN 82071900 for the supply of the imported bits at the price agreed in the contract.
7. The Central Government has issued Notification No.3/2017- Central Tax (Rate) dated 28 June 2017 wherein it has been provided that the intra-state supply of taxable goods to licensee i.e. the customers shall be taxable at the rate of 2.5% if the customer produces before the jurisdictional GST authority an EC obtained from DGH certifying that the said goods are required for petroleum operation. Identical Notification No.3/2017- Integrated Tax (Rate) dated 28.06.2017 has been issued under the Integrated Goods and Services Tax Act, 2017. Similarly, the State of Andhra Pradesh has provided similar benefit under the Andhra Pradesh Goods and Services Tax Act, 2017 (vide Notification No.G.O.Ms.No.583 dated 12th December 2017).
In the above circumstances the appellant approached the Advance Ruling Authority-Andhra Pradesh for Ruling on the following queries:-
