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2021 (9) TMI 1058 - AAR - GSTLevy of service tax - Job-work - activity of providing service of regasification of LNG owned by its customers to convert to RLNG, from its Plant at Dahej, Gujarat - classifiable under entry (id) of Heading No. 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended vide Notification No. 20/2019-CT (Rate) dated 30-09-2019 w.e.f. 01.12.2019 or not - HELD THAT - The subject activity of conversion of LNG into RLNG is a process undertaken by Petronet on LNG belonging to another GST Registered persons, namely M/s. Bharat Petroleum Corporation Ltd., Dahej, Gujarat (GSTIN 24AAACB2902M1ZZ), M/s. Bharat Petroleum Corporation Ltd., Maharashtra (GSTIN 27AAACB2902M1ZT), Torrent Power Ltd., Surat, Gujarat (GSTIN 24AACCT0294J1C) and Torrent Power Ltd., Bharuch, Gujarat (GSTIN 24AACCT0294J2ZB) We note that LNG is goods classified at HSN 2711. Thereby, we hold that subject activity merits to be covered at entry 'id' of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended. Petronet's activity of re-gasification of LNG owned by its GST registered customers amounts to rendering of service by way of Job Work and merits to be covered at entry 'id' of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended, liable to CGST at 6%.
Issues Involved:
1. Classification of service provided by M/s. Petronet LNG Ltd. as job work under CGST Act. 2. Applicability of the rate of CGST on the service provided. Analysis: Issue 1: Classification of service as job work under CGST Act The applicant, M/s. Petronet LNG Ltd., provides regasification services to its customers on LNG owned by the customers, known as 'Tolling Model'. The activities involved in re-gasification include reception of LNG ships, storage, re-gasification, and transportation of RLNG to customers. The applicant argued that their service falls under the category of job work as per Notification No.11/2017, amended by Notification No.20/2019. The Circular No. 126/45/2019-GST clarified the scope of the notification entry, emphasizing the distinction between job work services and manufacturing services on physical inputs owned by others. The Authority for Advance Ruling examined the definitions and found that the conversion of LNG into RLNG by Petronet for GST registered customers qualifies as job work under Section 2(68) of the CGST Act. Issue 2: Applicability of the rate of CGST The ruling determined that Petronet's activity of re-gasification of LNG owned by its GST registered customers constitutes service by way of job work, falling under entry 'id' of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended. Therefore, the service provided is liable to CGST at a rate of 6%. The Authority's decision was supported by the Government Circular 126/45/2019-GST, which provided further clarity on the issue. Consequently, the ruling confirmed that Petronet's service of re-gasification is classified as job work and subject to CGST at 6%. This comprehensive analysis of the judgment highlights the classification of the service provided by M/s. Petronet LNG Ltd. as job work under the CGST Act and the applicable rate of CGST on the service rendered.
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