Page 62 - GSTL_13th August 2020_Vol 39_Part 2

148 GST LAW TIMES [ Vol. 39
6.7 As per the aforesaid definitions, supplies in conjunction with each
other would imply supplies that are made together or in combination. Here, it is
submitted that the chemicals, additives and other materials are required to per-
form the services under the Contract by the Applicant and such mud chemicals
and additives cannot be procured independently. In the present case, the mud
chemicals and additives are not supplied independent of the mud engineering
services performed in the offshore location. Thus, it can be said that such mud
chemicals and additives are supplied in conjunction with the supply of mud en-
gineering services.
6.8 As dismissed above, since supply of mud chemicals and additives
are naturally bundled and supplied in conjunction with the supply of mud engi-
neering services, such supply of chemicals and mud engineering services would
qualify as ‘composite supply’ as per Section 2(30) of the CGST Act.
7. In this regard, the second aspect which is raised before the authority
is whether such mud engineering services are covered by Entry 9986 covering
services of exploration or drilling inserted vide Notification No. 1/2018-Central
Tax (Rate), dated 25-1-2018 amending the original Notification No. 1/2017-
Central Tax (Rate), dated 28-6-2017 and substituted Entry 24(ii) with the follow-
ing entry :

Sl. Chapter, Description of Service Rate Con-
No. Section or (per dition
Heading cent.)
(1) (2) (3) (4) (5)
24 Heading (ii) Service of exploration, mining or 12 -
9986 drilling of petroleum crude or natural gas
or both.

7.1 The description of scope of services provided under the Contract re-
flect the Applicant is providing mud engineering and waste management ser-
vices to OIL India for smooth drilling of well and to ensure that the well is
drilled in the desired size. It further prevents the well from collapse and main-
tains the integrity of well thereby resulting into completion and improvement of
the well. The Applicant essentially executes an integrated Contract of mud engi-
neering and drilling waste management of the well along with supply of chemi-
cals for the supply of such services, in the nature of drilling activities. It is evi-
dent that OIL India intends to receive the services for the smooth extraction of
petroleum crude and it becomes apparent that the services provided are for ex-
traction of petroleum crude or natural gas or both. Thus, the specific entry i.e.
Entry 9986 which covers the services of exploration or drilling supplied is appli-
cable to the mud engineering and other services provided under the Contract.
7.2 Further, in respect of taxability of composite supply, Section 8 of the
CGST Act provides as under :
“8. Tax liability on composite and mixed supplies. -
The tax liability on a composite or a mixed supply shall be determined in
the following manner, namely :-
(a) a composite supply comprising two or more supplies, one of
which is a principal supply, shall be treated as a supply of
such principal supply; and

GST LAW TIMES  13th August 2020  62