2026-VIL-148-AP
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SGST High Court Cases

GST - Composite Supply - Classification of supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis - Petitioner is awarded a contract by Oil India Limited for providing mud engineering services and supplying mud chemicals/additives for drilling operations. The petitioner approached the AAR seeking a ruling on whether the supply of mud engineering services along with supply of imported mud chemicals and additives qualifies as a composite supply under the GST Act. The AAR and the AAAR ruled that the supply of services and goods cannot be considered as a composite supply - Whether the supply of mud engineering services along with supply of mud chemicals and additives by the petitioner should be treated as a composite supply under the Section 2(30) of the CGST Act, 2017 – HELD - The contract between the parties was for the purposes of managing the drilling activities of Oil India Limited, which required the petitioner to monitor the drilling operations and inject the necessary materials as required. The supply of mud engineering services and the supply of chemicals/additives were naturally bundled and supplied in conjunction with each other in the ordinary course of business, as the supply of both services and goods were necessary for execution of the contract. The chemicals and additives supplied by the petitioner were not off-the-shelf goods, but were compounds prepared by the petitioner to suit the peculiar requirements of the drilling site. The fact that separate bills are being issued, against the supply of goods, would not make any difference for ascertaining the nature of the transaction. Some of the criteria for determining whether a contract is a composite supply, is to see whether supply of both services and goods are necessary for execution of the contract and whether they are in conjunction with each other. The supply of mud engineering services and the supply of chemicals/additives by the petitioner to Oil India Limited should be treated as a composite supply – The Authority for Advance Ruling as well as the Appellate Authority for Advance Ruling have erred in holding that the supply of services and goods by the petitioner is not a composite supply - The orders of the AAR and AAAR are set aside and the supply of mud engineering services and supply of mud chemicals/additives is held to be a composite supply under the GST Act - The petitioner is given liberty to approach the appropriate authority for fixation of the applicable rate of tax – The writ petition is allowed
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