Page 65 - GSTL_13th August 2020_Vol 39_Part 2

2020 ] IN RE : HALLIBURTON OFFSHORE SERVICES INC. (OIL INDIA) 151
9.2 The Applicant sought advance ruling on determination of classifica-
tion and consequent liability to pay GST on goods/services as supplied by the
Applicant under the Contract with the Customer viz. M/s. OIL. To be more pre-
cise reference is invited to the questions (a) to (c) {raised in Exhibit-1 attached to the
Application in GST-ARA-01}. Ruling on the questions (b) & (c) will be automatically
followed once the question (a) is answered. At the outset, the undersigned prefer
to examine the issue or question as to whether the supply of mud engineering
services along with supply of imported mud chemicals and additives provided
on consumption basis by the applicant under the Contract qualify as composite
supply or not.
9.3 Reference is drawn to sub-section (30) of Section 2 of the CGST Act,
2017 and according to which ‘composite supply’ means
“a supply made by a taxable person to a recipient consisting of two or more
taxable supplies of goods or services or both, or any combination thereof
which are naturally bundled and supplied in conjunction with each other in the
ordinary course of business, one of which is a principal supply”.
2(a) Above said definition inter alia laid down two crucial pre-
conditions for merit classification of a supply as a ‘composite supply’.
Foremost condition is that supplies of goods or services or both or any
combination thereof should be naturally bundled. The next one is that they
should be supplied in conjunction with each other. It is noticed that the
word ‘conjunction’ was not defined under CGST Act, 2017 nor the word
‘naturally bundled’. However, Section 2(90) of the CGST Act, 2017 de-
fines ‘Principal supply’ as per which it means :
“the supply of goods or services which constitutes the predominant
element of a composite supply and to which any other supply form-
ing part of that composite supply is ancillary”
2(b) To have a realistic understanding of the words ‘naturally bundled’
and ‘conjunction’, the definitions and meanings as provided in the erst-
while laws (as far as ‘naturally bundled’ is concerned) or in the dictionary
(as far as the word conjunction is concerned) have given cognizance in ar-
riving at the answer. Reference is also sought to the Education guide on
Composite supply and Mixed supply provided by the Central Board of
Indirect Taxes & Customs in the website www.cbic.gov.in. Accordingly,
the aspects are examined and the findings are as under :
9.4 M/s. Halliburton Offshore Services (hereinafter referred to as ‘the
Applicant’) was awarded a Contract No. 62054290 by M/s. Oil India Limited
(hereinafter referred to as ‘M/s. OIL’) vide letter under Ref No.
OIL/KGB/CONT-6205290/637, dated 19-8-2014 (hereinafter referred to as the
Contract). As per said contract, the applicant should provide ‘Mud Engineering
and Drilling Waste Management services’ for drilling three (3) HPHT Explorato-
ry Well in KG Basin.
9.5 Clause-10 of Section-II of the Contract speaks about Scope of work
i.e. Scope of Service to be provided by the Applicant. It is noticed that the Mud
Engineering Services to be provided by the Applicant is inclusive of
Tools/Equipment/Laboratory facilities/Consumables/Chemicals/additives and
Personnel for drilling of HTHP Wells in KG onshore. The contract further laid
emphasis that the applicant is required to provide complete mud service and that
the scope of the work includes (but not limited to) designing and formulation of

GST LAW TIMES  13th August 2020  65