Page 65 - GSTL_20th August 2020_Vol 39_Part 3

2020 ] IN RE : HALLIBURTON OFFSHORE SERVICES INC. (LIH) 279
beneath the surface of the earth. There is a probability that the equipment/tools
used for drilling services might get stuck or lost due to uncontrollable or unfore-
seen down hole environmental situations in the oil and gas well and might not
be retrievable. When such equipment/tools are lost in hole or damaged beyond
repair, drilling services cannot be performed until new equipment/tools are
made available by the Applicant. This leads to disruption of services due to such
LIH equipment. The LIH equipment is then required to be replaced in order to
continue the provision of drilling services.
6.3 Further, when the accident of the equipment occurs, the Applicant
has to immediately inform ONGC for verification of the LIH equipment. After
confirmation of such LIH equipment by ONGC, as per terms and conditions of
the agreement signed between the Applicant and ONGC, the Applicant raises an
invoice on ONGC for reimbursement of amount towards LIH equipment as per
the calculation provided in the contract. ONGC approves the calculation and
makes payment for LIH equipment/tools only if the LIH did not occur due to
gross negligence/mistake of the Applicant.
6.4 The Contract executed by the Applicant with ONGC contain claus-
es for compensation of such LIH equipment, [clause 31(b) of the Contract]. In
other words, in the event of any loss of equipment/tools in hole other than as a
result of gross negligence on part of the Applicant, ONGC reimburse the Appli-
cant for such lost equipment/tools as per the Agreement.
6.5 To determine the applicability of GST on reimbursement received
towards LIH equipment, we refer to the charging provision contained under Sec-
tion 9 of the CGST Act which provides that GST is levied on a ‘supply’ of goods
and/or services.
“9. Levy and collection. - (1) Subject to the provisions of sub-section (2),
there shall be levied a tax called the central goods and services tax on all in-
tra-State supplies of goods or services or both, except on the supply of alco-
holic liquor for human consumption, on the value determined under sec-
tion 15 and at such rates, not exceeding twenty per cent., as may be notified
by the Government on the recommendations of the Council and collected in
such manner as may be prescribed and shall be paid by the taxable person.”
(emphasis supplied)
6.6 The term ‘supply’ is defined under Section 7 of the CGST Act, as
follows :
“7. Scope of supply. - (1) For the purposes of this Act, the expression
“supply” includes -
(a) all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, license, rental, lease or disposal
made or agreed to be made for a consideration by a person in
the course or furtherance of business;
(b) import of services for a consideration whether or not in the
course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be
made without a consideration; and
(d) the activities to be treated as supply of goods or supply of ser-
vices as referred to in Schedule II.”
(emphasis supplied)
6.7 Further, the term “goods” and “service” are defined under Section 2
of the CGST Act as follows :
GST LAW TIMES  20th August 2020  65