Page 64 - GSTL_13th August 2020_Vol 39_Part 2

150 GST LAW TIMES [ Vol. 39
actual consumption basis duly certified by the company representative and
OIL Chemist.
16.2.4 The Contractor shall provide complete chemical product data for
each chemical product data including but not limited to brand name, manu-
facturer’s name, specifications/test reports of the chemicals, units of pack-
aging, country of origin, specification and Material safety data sheet
(MSDS). The Contractor shall provide complete list of chemicals as per full
list provided for drilling, completion and wellbore clean up fluids along
with the bid.
16.2.7 Company shall not buy any leftover chemicals brought by the Con-
tractor after completion of the project/expiry of the contract under any cir-
cumstances.
16.2.9 Mud chemicals shall be delivered by the Contractor at the well site.
The Company shall reimburse the cost of chemicals at actual consumption
basis to the contractor certified by OIL Chemist/Company Representative.
However, the Contractor is required to stock sufficient quantity of mud
chemicals at for any eventuality.”
8.4 The prices for such chemicals and consumables have been identi-
fied separately under the Contract under Proforma B (Part L) of the Contract.
Accordingly, the Applicant raises invoice for supply of goods to OIL India sub-
ject to verification of quantity consumed.
8.5 In light of the above aspects, the Applicant desires to examine
whether supply of goods namely chemicals and additives, etc. is eligible for con-
cessional GST rate of 5% vide Serial No. 404 of Notification No. 50/2017-Cus.,
dated 30 June, 2017, provided for petroleum operations under taken under petro-
leum exploration licenses or mining leases, granted by the Government of India
or any State Government to the Oil and Natural Gas Corporation or OIL India
Limited on nomination basis, subject to production of EC by the supplier.
8.6 In view of above factual and legal analysis, the Applicant submits
the following :
(a) Supply of mud chemicals and additives provided by the Applicant
under the Contract does not qualify as composite supply.
(b) If supplies provided under the Contract by the Applicant qualify as
composite supply then such supply of mud Engineering and drill-
ing services along with supply of mud chemicals and additives
would be subject to GST 12%/18%, as the case may be, as services of
exploration, mining or drilling of petroleum crude or natural gas or
both under Entry 9986(ii) of Notification No. 11/2017-C.T. (Rate),
dated 28 June, 2017.
(c) If supplies provided under the Contract by the Applicant does not
qualify as composite supply then supply of goods such as chemi-
cals, additives, etc. for specified petroleum operation will be eligible
for concessional GST rate of 5% against an EC in terms of Serial No.
404 of the Notification No. 50/2017-Cus., dated 30 June, 2017.
9. Discussion and findings :
9.1 We have examined the issues raised in the application. The taxabil-
ity and the applicable rate of tax for the goods and services supplied or to be
supplied, as governed under the provisions of respective GST Acts are examined.
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