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2023 (12) TMI 889 - AAR - GSTClassification of service - Job-work - applicant's activity of providing service of re-gasification of Liquified Natural Gas owned by its customers (Who are registered under GST Act) to convert to Re-gasified LNG by raising the temperature of the received LNG in its plant at Dhamara and sending/delivering the RLNG back to its customers through pipelines (as per Job Work Service agreement) - classifiable under entry (id) of Heading No 9988 at SI. No. 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended vide Notification No. 20/2019- CT (Rate) dtd. 30.09.2019 and chargeable to GST @ 12%? HELD THAT - The subject activity of conversion of LNG into RLNG is a process undertaken by the Applicant on LNG belonging to other GST Registered persons, namely Gail India Limited Odisha (GSTN 21AAACG1209J2Z7), GAIL India Limited, Uttar Pradesh (GSTN 09AAACG1209J3ZS), GAIL India Limited, Madhya Pradesh (GSTN 23AAACG1209J4Z1 / 23AAACG1209J3Z2), Indian Oil Corporation Limited, Odisha (GSTN 21AAACI1681G1Z1). It is noted that LNG is goods classified at HSN 2711. Further, it is found that the processed goods (RLNG) is to be supplied back to the customers of the Applicant within one year (as declared by the Applicant). So, all the pre-requisites are apparently satisfied for an activity to be 'Job work'. Government Circular No. 126/45/2019-GST dated 2211-19 has clarified this issue beyond any doubt. Hence, the subject activity of conversion of LNG to RLNG merits to be covered at entry 'id' of Heading 9988 at SI. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017 as amended.
Issues Involved:
1. Whether the Applicant's activity of re-gasification of LNG amounts to rendering of service by way of job work as defined under Section 2(68) of the CGST Act, 2017 and OGST Act, 2017. 2. If yes, whether the re-gasification service by way of job work is classifiable under Entry (id) of Heading No. 9988 of SI. No. 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended and eligible for GST at the rate of 12%. Summary: Issue 1: Whether the activity amounts to job work: The Applicant, M/s. Dhamra LNG Terminal Private Limited, sought an advance ruling on whether their activity of re-gasification of LNG owned by its customers qualifies as "job work" under Section 2(68) of the CGST Act, 2017 and OGST Act, 2017. The Applicant receives LNG from customers, stores it, re-gasifies it into RLNG, and delivers it back to the customers. The definition of "job work" includes any treatment or process undertaken by a person on goods belonging to another registered person. The Authority confirmed that the Applicant's activity satisfies all pre-requisites for "job work" as it involves processing LNG (goods) owned by GST-registered customers and returning the processed goods (RLNG) within one year. Thus, the activity qualifies as "job work." Issue 2: Classification and GST rate: The second issue was whether the re-gasification service by way of job work is classifiable under Entry (id) of Heading No. 9988 at SI. No. 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended. The Authority referred to Circular No. 126/45/2019-GST dated 22.11.2019, which clarified that entry at item (id) covers job work services as defined in Section 2(68) of the CGST Act, 2017, and is exigible to GST at 12%. The Circular distinguishes between job work services under item (id) and other manufacturing services under item (iv). The Authority concluded that the Applicant's activity of re-gasification of LNG merits coverage under entry (id) of Heading 9988 and is liable to GST at 12%. Ruling: The Applicant's activity of re-gasification of LNG owned by its GST-registered customers amounts to rendering of service by way of job work and is classifiable under entry (id) of Heading 9988 at SI. No. 26 of Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended, and is liable to GST at 12%. Appeal: The Applicant or jurisdictional officer, if aggrieved by the ruling, may appeal to the Odisha State Appellate Authority for advance ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the advance ruling.
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