Page 64 - GSTL_20th August 2020_Vol 39_Part 3

278 GST LAW TIMES [ Vol. 39
ation of 50%. The CONTRACTOR should provide the cost
along with the date, of purchase of each equipment Unit with
documentary evidence along with the invoice for Lost in Hole
items. The above cost and date of purchase shall be taken for
working out their claim for Lost in Hole items.
(c) Service tax on LIH (Lost in Hole), if applicable, shall be to
CONTRACTOR’S account.”
The applicant had filed an application in Form GST ARA-01, dated 19-11-2019,
by paying required amount of fee for seeking Advance Ruling on the following
issues, as mentioned below.
4. Question raised before the Authority :
The applicant filed the present application seeking a ruling from this Au-
thority on the following issues :
Determination of liability and consequent classification to pay Goods
and Services Tax (‘GST’) on reimbursement received towards Lost in
Hole/Damages beyond Repair equipment (collectively referred as ‘LIH equip-
ment’) by the Applicant under the Contract with the Customer i.e., whether re-
imbursement received towards LIH equipment can be considered as a supply as
per Section 7 of the CGST Act, 2017 and hence, liable to GST?
If reimbursement received towards LIH equipment can be considered as
supply and liable to GST, what would be the classification and the rate of GST
applicable on such supply? Whether the same would be treated as “agreeing to
tolerate an act” as per clause 5(e) of Schedule-II of the CGST Act, 2017 and sub-
ject to GST at the rate of 18% or the same would be treated as a composite supply
of works contract service (as a part of main service under the Contract and thus,
GST can be charged at the rate of 12% equivalent to the GST rate applicable for
supply of composite works contract services?
On Verification of basic information of the applicant, it is observed that
the applicant falls under Central jurisdiction, i.e. Superintendent, Rama-
nayyapeta Range, Kakinada CGST Division. Accordingly, the application has
been forwarded to the jurisdictional officer and a copy marked to the State Tax
authorities to offer their remarks as per the Sec. 98(1) of CGST/APGST Act, 2017.
In response, remarks are received from the jurisdictional officer con-
cerned stating that there are no proceedings lying pending or passed relating to
the applicant on the issue, for which the Advance Ruling sought by the appli-
cant.
5. Record of personal hearing :
The Authorised Representative, Sri Shyam Sundar Bangaru appeared for
Personal Hearing on 19-12-2019 and they reiterated the submission already made
in the application.
6. Applicant’s interpretation of law and facts :
6.1 The Applicant made the following submissions on the following
grounds, amongst others, with a request to consider each of which as an alterna-
tive and without prejudice to each other :
A. LIH can be considered as a supply as per Section 7 of the CGST Act, 2017 :
6.2 The applicant submits that as mentioned in the background, for
supplying bundled services in relation to oilfield drilling service, they utilize cer-
tain specialized equipment/tools for drilling oil and gas wells in offshore and
onshore environment to pre-defined bottom hole targets which are carried out
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