GST
rates applicability to various classifications of professional, technical, and
business services related to the mining and exploration sector
Appellate Authority for Advance Ruling : Maharashtra
ORDER NO. MAH/AAAR/DS-RM/14/2022-23 Date: 03.01.2023
M/s. Worley Services India Pvt. Ltd.
M/s. Worley Services
India Pvt. Ltd. provides project management consultancy (PMC) services and
engineering, procurement, and construction management (EPCM) services,
primarily in the oil and gas, chemicals, metals, and minerals sectors.
Facts of the Case
·
Background: Worley Services
India Pvt. Ltd. is part of Worley Parsons Limited, a global engineering company
providing project delivery and consulting services.
·
Client: Vedanta Limited (VL), engaged in the
exploration and mining of natural resources.
·
Agreements: Worley Services entered into agreements with
VL to provide PMC services for specific projects aimed at developing new
facilities for oil and gas extraction.
·
Scope of Work: The PMC services include reviewing,
monitoring, managing, and controlling all aspects of project execution to
ensure quality, timely completion, and cost management.
Questions Raised by Applicant
1.
Whether the services provided by the appellant are classified
under SI No. 24(ii) of heading 9986 of the Rate Notification as support
services to exploration, mining, or drilling of petroleum crude or natural gas
or both, attracting GST at 12%.
2.
Alternatively, whether the services are classified under SI No.
21(ia) of heading 9983 as other professional, technical, and business services
relating to exploration, mining, or drilling of petroleum crude or natural gas
or both, attracting GST at 12%.
3.
If not classifiable under the aforementioned entries, what would
be the appropriate classification and applicable GST rate?
Relevant Sections:
·
Section 97(a) of the CGST Act: Classification of any goods or
services or both.
·
Notification No. 11/2017-Central Tax (Rate): Relevant GST rate
notifications and subsequent amendments.
Submission by Applicant
The applicant argued
that their PMC services should be classified under either SI No. 24(ii) of
heading 9986 or under SI No. 21(ia) of heading 9983, both attracting a GST rate
of 12%. They contended that their services are integrally connected with the
mining operations and are essential for the development and augmentation of oil
and gas fields.
Findings and Decision by Ruling Authority
Maharashtra Authority
for Advance Ruling (MAAR):
·
The services provided by Worley are not covered under SI No.
24(ii) or SI No. 21(ia) of the Rate Notification.
·
The services are classified under the residual entry No. 21(ii)
of the Rate Notification, attracting GST at the rate of 18% (CGST 9% + SGST
9%).
·
Rationale: Services under 998621 include those participating in
mining activities, which Worley’s services do not directly involve. The
services do not fit within geological, geophysical consulting, or mineral
exploration services.
Maharashtra Appellate Authority for Advance Ruling (MAAAR):
·
Upheld the MAAR's order.
·
Classified the appellant's services under SAC 998349
("Other professional, technical, and business services nowhere else
classified") under SI No. 21(ii) of the Rate Notification, attracting GST
at the rate of 18% (CGST 9% + SGST 9%).
Conclusion
Worley Services India
Pvt. Ltd.'s PMC services are classified under SAC 998349 as "Other
professional, technical, and business services nowhere else classified,"
attracting a GST rate of 18% (CGST 9% + SGST 9%). The decision clarifies the
GST rates applicable to various classifications of professional, technical, and
business services related to the mining and exploration sector.
Disclaimer: All the Information is based on the notification, circular
and order issued by the Govt. authority and judgement delivered by the
court or the authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
