2024-VIL-15-AAAR
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SGST AAAR

GST – Rajasthan AAAR - Manner of Classification of Service - Classification of Engineering, Procurement and Construction (EPC) Contract for construction of customized additional infrastructure facilities under Vedanta's Mangala Upgradation Project – Whether the activity undertaken by the Appellant by way of supply, survey, designing, installation and commissioning of project under EPC contract for construction of customized additional infrastructure facilities under Vedanta's Mangala Upgradation Project shall be Classifiable under SAC Heading No. 9954 – assessee appeal challenging the impugned order of the AAR with prayer to declare that the activity undertaken by the Appellant is classifiable under SAC Heading No. 998621 or, alternatively, under SAC Heading No. 9983 – HELD - It has been specifically mentioned in the CBIC Circular No. 114/33/2019-GST, dated 11.10.2019 that Explanatory Notes to the Scheme of Classification of Services adopted for the purposes of GST describe succinctly the activities associated with exploration, mining or drilling of petroleum crude or natural gas under heading 9983 and 9986. Thus, the scope of services provided by the Appellant needs to be examined in terms of the description of services given in the Explanatory Notes - the appellant have been tasked with installation and construction of the proposed facilities concerning the augmentation of Liquid Handling capacity along with various infrastructure which is aimed at capacity expansion of MPT – the provisions of the contract makes it amply clear that the Appellant have been assigned the work of establishment of new facilities for oil and natural gas extraction alongside the already existing facilities at the MPT - Since the appellant have been tasked with establishment of infrastructure facilities for oil and gas extraction, the activities undertaken by the Appellant in pursuance of the EPC Contract cannot, by any stretch of imagination, be said to be support services to oil and gas extraction. The distinction between the activities undertaken by the Appellant in terms of the EPC contract and the activities included in the definition of SAC Heading No. 998621 is strikingly clear. Therefore, the activities undertaken by the Appellant in pursuance of the EPC Contract cannot be classified under SAC Heading No. 998621 as these are not in the nature of support services to oil and gas extraction - so far as SAC Heading No. 998343 is concerned, the same has a very narrow scope/limited coverage of mineral exploration and evaluation information which is certainly not the activity proposed to be undertaken by the Appellant in pursuance of the instant EPC Contract. Thus, difficult to agree to the alternate suggestion that the activities undertaken by the Appellant fall under the said SAC Heading No. 998343 - the scope of the current contract under MUPS2- EPC2 project comprises of facilities for augmentation of existing Liquid Handling capacity along with various infrastructure facility. These aspects of the contract of the Appellant cover such activities which do not answer the description of geological or geophysical consulting services or mineral exploration and evaluation services - 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 under description 'Construction Services' which are in the nature of composite supply defined as works contract - The proposed supplies by the appellant attract tax at the rate of 18% GST in terms of item (xii) of entry at Sl. No. 3 of Notification No. 11/2017-CT (R), dated 28.06.2017 as amended - the Ruling passed by the AAR needs no interference – the appeal is dismissed
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