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TMI Blog2020 (9) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is given. It is also a practice followed by DGH to issue only one EC per consignment. The Appellant imports the goods only for the purpose of supplying to ONGC. The EC is issued on the application / recommendation of ONGC. The said EC clearly identifies the goods for which the exemption is granted with added obligation of specified use. The condition of specified use and obtaining certificate to this effect is a common condition under the customs and the GST law. Thus, when the exemption is attached to the goods and once, for the purpose of Customs law, it is established that the goods are eligible for exemption, thus the very same goods when put to very same use in another but continuing limb of the transaction, should be eligible for exemption on the basis of same EC without insisting on a separate EC, especially since DGH follows the practice of issuing single EC per consignment. The Appellant cannot be put to detriment for the things which heir control. It is also worthwhile to note that both the notifications do not require EC to be addressed to any entity or require it to be obtained by any specific person. The relevant condition is to produce the EC before a parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESH PENUMAKA, MEMBER Authorized Representative : Sri Prasad Paranjape, Advocate (Under Section 101 of the Central Goods and Service Tax Act and the Andhra Pradesh Goods and Service Tax Act). At the outset, we would like to make it clear that the provisions of both the CGST Act and the APGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the APGST Act. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and APGST Act ] by M/s. Halliburton Offshore Services Inc. (herein after referred to as the Appellant ) against the Advance Ruling No. AAR No.07/AP/GST/2020 dated 25.02.2020 Authority for Advance Ruling, Andhra Pradesh. 1. Brief Facts of the Case: 1. The appellant is engaged in supply of comprehensive range of oilfield related services such as drilling services, exploration and mining related services, etc. to oil exploration and production compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t approached the Advance Ruling Authority-Andhra Pradesh for Ruling on the following queries: Whether the import of drill bits for supply to ONGC at its location in India on consumption basis involves two supplies namely, Import of drill bits into India; and Indigenous movement from the port of import to ONGC's location. 1) If two supplies are involved in the above mentioned transaction, then whether two Essentiality Certificates ('EC') are required to be issued i.e. One for import of drill bits into India under serial no.404 of Notification No.50/2017- Customs dated 30.06.2017 and Another for indigenous movement under Notification No.3/2017- Central Tax (Rate) dated 28.06.2017. 2) If answer to (a) above is no, then whether the supply of drill bits to ONGC in India will be covered by serial no.404 of Notification No 50/2017-Customs dated 30.06.2017 (i.e. under single EC) and no two separate ECs are required. The Authority for Advance Ruling Andhra Pradesh in ruling orders in AARNo.07/AP/GST/2020 dated 25.02.2020 held: 1. That the Import and subsequent Supply to ONGC on consignment basis i.e. on approval basis are two di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 of the application filed by the appellant before the Ld. Authority, the said transaction of supply of drill bits to ONGC entails 2 legs viz. (1) import of drill bits from HESI and (ii) supply of imported drill bits to the agreed 12 locations of ONGC. E. Admittedly, the Section under the CGST Act/APGST Act/IGST Act providing for the levy of the applicable GST on the aforesaid 2 transactions are distinct i.e. the charging section providing for the levy of IGST on import and for levy of CGST and SGST or IGST on supply of goods to ONGC for sale on approval basis is different, F. The Ld. Authority in para 8.3 and 8.4 of the impugned Ruling has observed that: i) It is a self-asserted and admitted fact on record that the appellant, under a contractual obligation, is required to import drill bits by themselves as an importer and undertake to supply drill bits to the delivery location of ONGC on consignment basis i.e., sale on approval basis. ii) In terms of Section 7 (2) of the IGST Act, the supply of goods imported into territory of India, till they cross the customs frontiers of India shall be treated to be a supply of goods in the course of inter - state tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leum operations, they are entitled to benefit of concessional import duties under Sr.No.404 of the Customs Notification. The said exemption is available in respect of the goods covered in list 33 annexed to the said notification and is subject to satisfying the conditions prescribed at condition no.48 annexed to the said Notification. L. One of the conditions prescribed under the said condition no.48 to customs Notification is that the importer should furnish an EC from the DGH inter alia certifying that the imported goods are required for petroleum operations. The relevant extract of the said condition is reproduced below: where the importer, - (i) Is a contractor, he produces to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, at the time of importation, the following, namely:- 1) A certificate from a duly authorized officer of the Directorate General of Hydro Carbons in the Ministry of Petroleum and Natural Gas, Government of India, to the effect the imported goods are required for: - A. Petroleum operations referred to in sub-clause (ii) of clause (a) and have been imported under the contract referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the key requirement of the condition prescribed under both the Notifications is to produce the EC from the DGH certifying that the goods are required for petroleum operations. The only difference is that the EC stated as a condition under the Customs Notification is to be produced before the Assistant Commissioner/Deputy Commissioner of Customs and under the Central Tax Notification is to be produced before the Assistant Commissioner /Deputy Commissioner of Central Tax. This difference is also because the Notifications are issued under the respective Acts. The key purport of both the conditions is the same. P. It is submitted that both the conditions say that an EC is required to be produced before the concerned Assistant Commissioner /Deputy Commissioner and does not say that it has to be addressed to the concerned Assistant Commissioner/Deputy Commissioner under the Customs Act or under the CGST/SGST Acts. Also, there is no requirement in the condition prescribed under either of the Notificatio7 to mention the Notification number under which the exemption is being claimed using that certificate. Q. Admittedly, the recommendation for granting of the EC is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court further held that the eligibility clause in relation to an exemption notification should be given strict meaning and the notification has to be interpreted in terms of its language; however, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed liberally. In the present case, since the Director General of Hydrocarbon has issued the EC certifying that the goods are required for petroleum operations, even if the said EC is not addressed to the officer under the CGST Act, that should not disentitle the applicant from the benefit of the notification without challenging correctness of the said EC. Admittedly, once the benefit has been granted under the customs notification by relying upon the same EC. The correctness of EC cannot be in any doubt. X. In another case, the Hon'ble Bombay High Court in the case of Larsen Toubro Ltd Vs. UOI - 2013 (298) ELT 217 (Bom) had an occasion to rule on the sanctity of Essentiality Certificate. In the said case, the dispute was whether the EC can be issued to an importer or a sub-contractor in the contract. The Court held that once the goods are found to be eligible and EC is issued, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate attended and made additional submissions as under: 4. Additional submissions: Facts: 1. The appellant is a company incorporated under the laws of Cayman Islands and operates in India as a project office. As part of its India Operations, the Appellant has also set up a unit in the State of Andhra Pradesh, which is registered under the GST law. 2. The appellant secured a contract bearing no.8040000039 dated 20 May 2015 from Oil Natural Gas Corporation Ltd ( ONGC ) to supply drill bits on consignment basis i.e., Sale on approval basis to ONGC's 12 different locations based on call -out order received from ONGC. 3 . Since the goods to be supplied by the appellant are to be used in petroleum operations undertaken under Petroleum Exploration Licenses or mining leases granted by the Government to ONGC, the goods are entitled for exemption (reduced rate of tax) under the Customs and GST laws. 4. One of the conditions to qualify for such exemption under both - Customs and GST laws, is to produce an Essentiality Certificate ( EC ) issued by the Director General of Hydrocarbon ( DGH ). The conditions of the exemption, including that of the EC are iden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that the exemption can be granted qua the goods not the person. Since the conditions in Customs exemption notification and GST notification are identically worded, it is submitted that the EC obtained for Customs should suffice for the purpose of GST notification also. 5. As already submitted, the Appellant imports the goods only for the purpose of supplying to ONGC. The EC is issued on the application / recommendation of ONGC. The said EC clearly identifies the goods for which the exemption is granted with added obligation of specified use. The condition of specified use and obtaining certificate to this effect is a common condition under the customs and the GST law. Thus, when the exemption is attached to the goods and once, for the purpose of Customs law, it is established that the goods are eligible for exemption, thus the very same goods when put to very same use in another but continuing limb of the transaction, should be eligible for exemption on the basis of same EC without insisting on a separate EC, especially since DGH follows the practice of issuing single EC per consignment. The Appellant cannot be put to detriment for the things which heir control. 6. Witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when one Government Authority has accepted the compliance of the Appellant, it is not open for the other Government Authority to deny the same. For this, the Appellant relies on the judgment in case of Commissioner of Income-Tax vs. Anandha Metal Corporation, 2004 SCC On Line Mad 952[(2005) 273 ITR 262]. 12. Once the Customs EC carries the same certification that is needed to claim exemption under the GST law, insistence of separate EC for GST exemption purpose is futile and not warranted in law. It is settled position in law that once the Appellant has demonstrated that the goods in question are entitled for exemption, then merely based on the template of the EC, exemption cannot be denied. Once the Appellant establishes their eligibility to the exemption, then the other conditions of the notification have to be liberally interpreted. In the present case, therefore, once it is admitted that the condition under the Customs Act and the GST law are the same, and the Appellant is granted valid exemption under the Customs law, the GST Authorities should not insist on separate EC for GST purpose. For this, the Appellant relies on the following: a. Oblum Electrical Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and different supplies involved i.e. one at the time of import under Customs and another during the course of local sale/supply under Central and state enactments. In the case of Innamuri Gopalan v. State of Andhra Pradesh, [1963] 2 SCR the Honourable Supreme Court held that the State was possibly right in the submission that the object behind the framers of the notification was to avoid double taxation but the operation of an enactment or of a notification has to be judged not by the object which the legislature or the notifying authority, as the case may be, may have had in mind but by the words which it has employed to effectuate the legislative intent . The same was reaffirmed in the case Hansraj Gordhandas v. H.H. Dave Ors., [1969] 2 SCR 260 But, the Operation of the notifications had to be judged not by the object which the rule making authority had in mind but by the words which it had employed to effectuate the legislative intent. In view of the above discussions, it is concluded that The Essentiality certificates prescribed under the said two notifications have to be furnished separately to avail the benefit of the said notifications. Thus th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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