AAAR RAJASTHAN RULES: L&T’s EPC SUPPLY IS A WORKS CONTRACT, NOT MINING SUPPORT

AAAR RAJASTHAN RULES: L&T’s EPC SUPPLY IS A WORKS CONTRACT, NOT MINING SUPPORT

RAJASTHAN APPELLATE AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

Before the Bench of:

1. Sh. Mahendra Ranga, Member (Central Tax)

2. Dr. Ravi Kumar Surpur, Member (State Tax)

Case Title :- M/s L&T Hydrocarbon Engineering Limited

(GST AAAR RAJASTHAN)

Appeal No. RAJ/AAAR/APP/09/2021-22

Advance Ruling No. RAJ/AAR/2020-21/18 dated 13.09.2021

Date of Judgement/ Order- 19th Decmber 2023

IMPORTENT PARAGRAPHS

Para No. 9.  The AAR, Rajasthan have answered the questions of the Appellant, vide their Ruling dated 13.09.2021 as under:
Question I – Whether the services provided by the applicant are classified under Sr. No. 24 (ii) of heading 9986 of Notification No. 1 1/2017-Central Tax (Rate) dated 28.06.2017 as ‘Support services to exploration, mining or drilling of petroleum crude or natural gas or both’ and attracts GST@ 12%.
Answer: – No
Question 2 – Whether the services provided by the applicant are classified under ‘Professional, Technical or Business Service relating to exploration, mining, or drilling of petroleum crude or natural gas or both’ under Sr. No. 2 1(ia) professional, Technical or Business Service to Mining) of the Rate Notification. and attracts GST @ 12% or Sr. No. 21(ia) of Heading 9983 01 Notification No. lt/2017- Central Tax (Rate) dated 28.06.2017 and attracts GST@ 12%.
Answer — No.
Question — 3 – Further, if the subject services are not classified under any of the aforesaid entry, what would be the appropriate classification the same and what rate GST would be imposable?
Answer – The activities or supply, designing & engineering, installation, Commission of project under EPC contract by the Appellant shall attract GST @18% under S. No. 3 Heading 9954 (ii) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017.

(K) Conclusion and findings:

In view of these observations we hold that:-

• Based on the analysis of activities, the Appellant are required to carry out in pursuance of the EPC Contract and keeping in view the true nature of supplies proposed to be undertaken by the Appellant, the proposed supplies are appropriately classifiable under SAC Heading No. 9954 answering to description ‘Construction Services’ which are in the nature ofcomposite supply defined as works contract.
• The proposed supplies are specifically covered by SAC Heading No. 9954 and the claim that ‘Construction Services’ of SAC Heading No. 9954 is a general description of the supplies and ‘support services’ of SAC Heading No. 998621 is more specifie to describe the proposed supplies is not supported by the EPC Contract as discussed above.
• The proposed supply is covered by the scope of ‘Construction Services’ of SAC Heading No. 9954 and neither the inclusions given under SAC Heading No. 998621 for Support Services nor the description of Heading 9983 covers the scope of the proposed supply, Hence, the claim for classification under SAC Heading No. 998621 or alternatively under Heading 9983 is not sustainable.
• The proposed supplies, therefore, attract tax at the rate of 9% in terms of item (xii) of entry at Sl. No. 3 of Notification No. 11/2017-CT (R), dated 28.06.2017 as amended and 9 % in terms of Notification issued under the RGST Act, 2017.

ORDER

In view Of the above discussion and findings, we hold that the Ruling dated 13.09.2021 of the AAR for Rajasthan in respect of the Appellant needs no interference up to the extent mentioned in item (i) to (iii) above and the same are hereby modified to the extent mentioned in item (iv) above of Para K of this order. The appeal is disposed of accordingly.