Page 72 - GSTL_20th August 2020_Vol 39_Part 3

286 GST LAW TIMES [ Vol. 39
7.2 The Applicant sought Advance Ruling on the following Ques-
tion/aspect
“Determination of liability and consequent classification to pay Goods
and Services Tax (‘GST) applicable on the reimbursement received by the
Applicant under the Contract from the Customer towards Lost in
Hole/Damage Beyond Repair of equipment/tool (in short ‘LIH’ equip-
ment) during execution of the services mentioned in the Contract.”
7.3 The undersigned has examined the Applicant’s question for ad-
vance Ruling in the light of the Statement of facts furnished in Exhibit-II to the
Application along with the Documents/material provided by the Applicant vis-
à-vis the legal provisions of the Central Goods and Services Tax Act, 2017, the
Goods and Services Tax Rules, 2017. We place the findings as under :
7.4 The Applicant was awarded a Contract bearing letter of Award No.
9010024545, dated 5-10-2016 by M/s. Oil and Natural Gas Company Limited (for
brevity referred as ‘ONGC or the Customer or the Recipient’}. The said contract
was for Hiring of Bundled Services for 05 Rigs and in accordance with terms and
conditions as envisaged in the Scope of the Work read with Payment Schedule
and other clauses of the Contract. It is seen from clause 2.3 (and wordings thereof)
of the Letter of Award dated 5-10-2016 that the said bundled services comprise of
individual services to be provided individually at different locations i.e. Shore
base, Drilling Unit.
7.5 As per clause 2.2(ii) of the Letter of Award, it is seen that some ser-
vices (of the bundled services under contract) may be required even after de-
hiring of the last rig and as such the individual service(s) shall be successfully de-
hired as per the requirement of the last well of the last rig to be de-hired. It is
clear from the very distinctive nature of each individual service (as given under
scope of work as ‘bundled services’), each of individual services can be per-
formed independently and they did not alter or affect performance of other ser-
vice(s) or services as a whole. It thus indicates that the individual ser-
vices/activities to be provided by the Applicant to the Customer can be said to
be naturally bundled in the course of furtherance of business. By virtue of defini-
tion to ‘Composite supply’ given under Section 2(30) of the CGST Act, 2017, it
therefore clear that ‘bundled services hired by ONGC and provided by the Ap-
plicant’ cannot be considered as a ‘Composite supply’ within the meaning of def-
inition under the Section 2(30) ibid.
7.5(i) Reference is invited to para 9(b) (under Exhibit-II) and to the
submissions of the Applicant placed under Exhibit-III attached to the Applica-
tion. In their submissions, the Applicant tried to analyse the classification of the
subject question :
(a) as to whether it falls under scope of ‘Works Contract Services’ as
per Entry-6 of Schedule-II of the CGST Act, 2017
(or)
(b) as to whether it falls under scope of ‘service viz agreeing to the ob-
ligation to refrain from an act, or to tolerate an act or a situation, or
to do an act’ under Entry 5(e) of Schedule-II to the CGST Act, 2017.
7.5(ii) It has been stated and committed by the Applicant at Para 21
(under Exhibit III) that ‘there is not contemplation of transference of title to the LIH
equipment’. For merit classification of an activity under a ‘Works Contract Service

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