Page 68 - GSTL_13th August 2020_Vol 39_Part 2

154 GST LAW TIMES [ Vol. 39
found to be of substandard quality and the contractor is unable to replace those
within a reasonable time without affecting operations. On examination of terms
and conditions under these clauses, it is found that all activities/events viz, pro-
curement, delivery, usage, rejection or replacement, demobilization and receipt
of consideration-relating to mud-chemicals and additives can be done inde-
pendently/separately. It is noticed that all these activities or events relating to
the goods (chemicals/additives/consumables) are not necessarily be procured,
delivered, replaced or demobilized simultaneously with those of other services
and goods namely ‘technical personnel or technical equipment or lab equipment
etc.’ Though the items mud chemicals and additives are essential and integral
part of the work of the Applicant under the Contract viz. “Mud Engineering and
Drilling Waste Management Services’, it is found that the supply of these items is
not necessarily be in conjunction with supply of other events namely services -
technical personnel and other goods on rental basis.
9.12 From the foregoing, it is observed that there are independent qual-
itative, quantitative and logistic (mobilization, delivery, replacement of deficient
or substandard materials, demobilization thereof etc.) compulsions with refer-
ence to procurement by the applicant, clauses for sub-contracting of petty ser-
vices, subsequent delivery (or supply) to M/s. OIL and usage (or consumption)
of additives/chemicals in mud engineering activity and drilling waste manage-
ment services. It is also observed that there are similar conditions prevailed in-
dependently to Technical Personnel and technical equipment (including labora-
tory equipment) separately. Thus, it is clear and evident that the different com-
ponents namely, technical personnel, technical equipment and additives/chemi-
cals/consumables are separately available for procurement and supply by the
applicant. It is therefore, understandable that supply of mud additives and
chemicals cannot be said to be supplied in conjunction with supply of services (tech-
nical assistance by way of supply of technical personnel) and supply of other goods
namely technical equipment.
9.13 As the essential second criteria of ‘supplied in conjunction with’
had not been complied, the supply of mud engineering services along with sup-
ply of imported mud chemicals and additives provided on consumption basis by
the Applicant’ under the contract do not qualify and classifiable as ‘composite sup-
ply’.
9.14 And therefore, the supply of imported mud-chemicals and mud
additives provided on consumption basis shall be classifiable as supply of goods
under respective HSNs of goods as specified under CGST Act, 2017. Similarly, it
is found that the other events supply of goods (on rental basis) and supply of
services (supply of technical personnel) shall be accordingly classifiable inde-
pendently under respective HSNs of Services/Goods as the case may be.
9.15 As the Answer to Question-A is No, the necessity of classification
of supplies as ought under Question or Point-B to ARA does not arise. As it is
found that the scope of the work under the subject contract is not a ‘composite
supply’ and each of the events/activity found to be classifiable independently (as
goods or as services as the case may be), the said events/activities will be
chargeable or leviable to applicable and prevailing respective GST rates.
9.16 The last Question or Point-C viz. is “Whether supply of mud chemi-
cals and additives on consumption basis at OIL India’s location in India provided under
the contract qualify for concessional GST Rate of 5% against an Essentially Certificate
under Notification No. 50/2017-Cus., dated 30-6-2017”. In this regard, a reference is
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