Bharat Petroleum Corporation Ltd ., In re

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT

M/s. Bharat Petroleum Corporation Ltd., Pt floor, Golden Triangle Building, Nr. Sardar Patel Stadium, Navrangpura, Ahmedabad, Gujarat 380 014 [for short — `applicant’] is registered under GST and their GSTIN is 24AAACB2902M1ZZ.

2. The applicant is a company promoted by the Government of India & is engaged in refining, marketing of petroleum products, sourcing & trading of LNG’. The applicant is also involved in re-gasification of LNG & subsequently supplying the re-gasified LNG [RLNG] to its customers.

3. The applicant had entered into an agreement² with Petronet LNG LNG on behalf of the applicant; that this agreement is of a job work model, wherein the LNG supplied by the applicant is worked upon by PLL & thereafter transferred back to the applicant in RLNG form for which the applicant pays the required charges.

4. PLL had earlier sought an advance ruling before GAAR³ who vide its order No. GURGAAR/R/40/2021 dated 11.8.2021, held that PLL’s activity of re-gasification of LNG, owned by its GST registered customers amounts to rendering of job work & merits to be covered under serial No. 26(id) of heading 9988 of notification No. 11/2017-CT(Rate) dated 28.6.2017, as amended & is liable to CGST @ 6%.

5. The applicant has also entered into an agreement⁴ with M/s GAIL (India) Ltd [for short -GAIL]. In terms of this agreement viz

• the responsibility of re-gasification is on the applicant in respect of the LNG owned by GAIL;
• the re-gasification shall he undertaken by PLL at their facility, on the direction of the applicant;
• it shall he the obligation of GAIL to deliver LNG to PLL, at the custody transfer point;
• the applicant’s obligation inter alia includes causing PLL to receive LNG at the custody transfer point, undertake re-gasification for GAIL & tender delivery to GAIL;
• the applicant shall not have title to LNG or RLNG;
• that the risk after receipt of LNG at custody transfer point upto delivery of RLNG shall be of 1³11;
• that in the case of failure to deliver RLNG, the applicant shall cause PLL to increase RLNG delivery rate;
• GAIL shall be responsible for paying appropriate taxes & dues; that GAIL shall be liable to pay re-gasification charges also;
• the applicant shall raise tax compliant invoice.

6. The applicant is of the view that the entire contractual construct between them and GAIL, is akin to a back-to-back job work arrangement wherein the applicant is responsible for undertaking job work activity through PLL. To substantiate the above view, they have raised the following averments viz

• the applicant is responsible for ensuring that PLL undertakes the job work;
• the applicant has entered into an agreement with PLL in this regard;
• GAIL pays applicant job work charges;
• that GST law contemplates multiple job work arrangements Circular No. 38/12/2018-GST dtd 26.3.2018];
• that the title of LNG and RLNG always remain with GAIL & never gets transferred to BPCL or PI,L;
• that they are eligible for the benefit under 26(id) of notification No. 11/2017-CT (R); that this notification does not prohibit back-to-back job work arrangement;
• that classification over specific entry to be preferred over general entry; that 26(id) to be preferred over serial no. 35 which deals with other services including services nowhere else classified;
• that they would like to rely on the case of Met Corporation Lid^s, Kirloskar Oil Engines Ltd⁶ , Shahnaz Commodities International P Ltd⁷, Shivangi Metal Industries P Ltd ⁸, AGFA India P Ltd⁹; I-IPL Chemicals Ltd’ ;
• that Rule 2(a) and 3(a) of GRI^T‘ is applicable to the present case;
• that it is a trite law that classification beneficial to the assesse is to be adopted; that they would like to rely on the case of Miniwool Rock Fibres Ltd¹²
• that they would also like to rely on the case of Ratan Melting & Wire Industries ¹³;
• they would like to rely on their own ruling ¹⁴, and the ruling of Maharashtra AAAR in the case of JSW Energy Ltd¹⁵.

7. In view of the foregoing, the applicant has raised the following questions seeking a ruling, viz

[i] Whether the applicant’s activity of providing service of regasification of LNG owned by GAIL/others would amount to rendering of service by way of job work within the meaning of section 2(68) of CGST Act, 2017 & GGST?

[ii]  If yes, then whether the said service of re-gasification by way of job work be classifiable under serial no. 26(id) of heading no. 9988 of notification No. 11/2017-CT (R) dated 28.6.2017 as amended & be chargeable to GST @ 12%?

8. Personal hearing was granted on 03.01.2025 and 8.4.2025 wherein Shri Onkar Sharma, appeared on behalf of the applicant and reiterated the facts as stated in the application. Ile submitted additional submissions comprising relevant provisions, copies of notification No. 11/2017-CT(Rate), GRI, circulars dated 26.3.2018 and 22.11.2019 and further also relied upon the following

• Dharma LNG Terminal P Ltd¹⁶
• Vac Met Corporation Ltd’⁷
• Al i sha Gruh Udhyo g^{l 8}
• JSW Energy Ltd¹⁹
• Tube Investments of India Ltd^2°

During the course of personal hearing on 8.4.2025, the applicant further informed that they have subleased the facility of PLL & that they are eligible to get the benefit of job work.

8.1 In pursuance to the transfer of Member (Centre), fresh personal hearing was held on 22.5.2025, wherein Shri Onkar Sharma, Advocate, appeared on behalf of the applicant and reiterated the submission further stressing that taxes follow the agreement.

Discussion and findings

9. At the outset, we would like to state that the provisions of both the CGST Act and the GGST 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 GGST Act.

10. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant’s submission/interpretation of law in respect of question on which the advance ruling is sought.

11. Before adverting to the submissions made by the applicant, we would like to reproduce the relevant provisions for ease of reference:

• CENTRAL GOODS AND SERVICES TAX, 2019 

(68) ‘job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be

construed accordingly;

• EXEMPTION NOTIFICATION

Notification No. 11/2017-CT(Rate) dated 28.6.2017, as amended [relevant extract]

(a)Printing of newspapers;

(b)Textiles & textile products falling under chapters 50 to 63 in the First Schedule to the Customs Tariff Act, 1975 (51 of

1975);

(c)all products bother than diamonds,] falling under chapter 71 in the First

Schedule to the Customs Tariff Act, 1975 (51 of 1975); I

(d)Printing f books (including Braille books), journals & periodicals;

[(da) printing of all goods falling under chapter 48 or 49 which attract CGST @ 2.5% or Nil,]

(e)and (ea)….

W all food & food products falling under chapters 1 to 22 in the First Schedule to the Customs Tariff  Act, 1975 (51 of 1975);

(g)all products falling under chapter 23 in the first schedule to the Customs Tariff Act, 1975 (51 of 1975), except dog and cat food put up for retail sale falling under tariff item 23091000 of the said chapter;

(h) —                                            . N Manufacture of handicraft goods. Explanation.- The expression ‘handicraft goods’ shall have the same meaning as assigned to it in notification No. 32/2017-CT, dated 15.9.2017, published in the Gazette of India, extraordinary, Part II, section 3.

0

Explanation.- For the purposes of this entry, the term ‘bus body building’ shall include building a body on chassis of any vehicle falling under chapter 87 in the first schedule to Customs Tariff Act, 1975;]

(a) printing of newspapers;

(b) printing of books (including Braille books), journals & periodicals.

(c) printing of all goods falling under Chapter 48 or 49, which attract CGST @ 2.5% or nil.

12. To summarize, the applicant has entered into an agreement with M/s. GAIL for re-gasification of their LNG. The applicant gets this activit regasification done through PLL, with whom, as is mentioned above, th entered into an agreement. The applicant’s contention is that their ac providing service of regasification of LNG owned by GAIL/others amounts to job work in terms of section 2(68) of CGST Act, 2017 & would be classifiable under serial no. 26(id) of heading no. 9988 of notification No. 11/2017-CT(Rate) dated 28.6.2017, as amended & be chargeable to GST @ 12%.

13. Before adverting any further, we would like to reproduce relevant clauses of the two agreements viz

REGASIFICATION AGREEMENT BETWEEN PETRONET LNG LTD & BPCL DATED 23.12.2013

A. PLL” has been jointly promoted by Indian Oil Corporation Ltd, Oil and Natural Gas Corporation Ltd, GAIL (India) Ltd and BPCL to undertake, inter alia import of LNG into India, development of facilities for receiving, regasification & sale of regasified LNG to consumers in India and to regasift LNG imported by any other person into India.

3. OBLIGATIONS

3.1 BPCL ‘s Obligation

(a) From the commencement date and during the term BPCL shall deliver LNG to PLL at the Custody Transfer point, receive RLNG at the delivery point & pay, for regasification or for its Pay for if not used Obligation, in accordance with and subject to the terms and condition of this agreement.

(b) For the avoidance of doubt, BPCL agrees and undertakes that in addition to the payment of the fixed facility charges & regasification charges, BPCL shall make necessary arrangements at its own cost & expense, for the delivery of LNG from the Loading port to the Unloading port & for evacuation of RLNG from the delivery point.

(c) Parties agree that BPCL may, with prior written consent of PLL, anytime prior to finalization of Annual Programme in accordance with Article 5.3.1(c), nominate any of its affiliates to use the regasification services to be provided by PLL, for a specified period of time & for a specified quantity during a contract year, at its sole risk and expense. Provided that, notwithstanding the allowance of use of Regasification Services by its Affiliate, BPCL shall at all times remain liable to PLL for all its obligation under this Agreement and shall indemnify PLL against any and all claims, losses & expenses arising from the use of Regasification services by BPCL ‘s affiliate.

12. PRICE

12.2 Fixed Facility Charge

Fixed facility charges shall mean the charges payable by BPCL for capacity reservation in PLL ‘s facilities, pursuant to the terms of this Agreement. The fixed facility charges with respect to each Billing Period shall be calculated at the fixed facility rate multiplied by the number of days in such billing period. ..  

AGREEMENT FOR SUBLETTING OF REGASIFICATION CPACITY BETWEEN BPCL AND GAIL (INDIA) LIMITED 

D. Alternate User is GAIL (India) Ltd & is desirous of utilizing the regasification capacity at PLL ‘s Facilities proposed to be sublet by BPCL, from BPCL ‘s already reserved regasification capacities at DLL’s

3. OBLIGATIONS

3.1 Alternate User’s Obligation

(a) Upon the execution of a Confirmation Memorandum & during the term thereof Alternate User shall deliver LNG to PLL at the Custody Transfer Point, receive RLNG at the Delivery Point and pay the Regasification Charges or for its Use or Pay Obligation, in accordance with and subject to the terms and conditions f this Subletting Agreement and the relevant Confirmation Memorandum.

3.2 BPCL ‘s Obligation

Upon execution of a Confirmation Memorandum and during the Term thereof BPCL shall cause PLL to receive LNG at the Custody ‘Transfer point from Alternate User and undertake Regasification for Alternate User and tender for deli very, at the Delivery Point, RING to Alternate User, or failing which pay Liquidated Damages in accordance with and subject to the terms and conditions of this Agreement and relevant Confirmation Memorandum. The energy value of RING delivered to Alternate User at the Delivery Point shall be equal to the energy value of LNG received by PLL Dahej terminal at the Custody Transfer Point, reduced by the energy value of the Allowed Loss and Consumption.

14. For the aforesaid work, the applicant is before us seeking a ruling as to whether their activity of providing service of regasification of LNG owned by GAIL/others would amount to rendering of service by way of job work within the meaning of section 2(68) of CGST Act, 2017. The applicant states that what they are undertaking is a back-to-back job work arrangement wherein they ensure that PLL being their job worker, undertakes re-gasification activity for GAIL.

15. The other averments made by the applicant is that they are responsible for ensuring that PLL undertakes the job work; that GAIL pays applicant job work charges; that the title of LNG and RLNG always remain with GAIL & never gets transferred to BPCI, or PLI,; that the applicant raises tax invoices, and therefore the service rendered, should fall within the ambit of ‘job work’ as defined

16. The applicant has also relied upon two circulars. We find that circular dated 26.3.2018 has clarified on issues related to job work. The relevant extract of the circular is reproduced below for ease of reference viz

Circular No. 38/12/2008 dated 26.3.2018 [relevant extracts]

2. As per clause (68) of section 2 of the CGST Act, 2017, Job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly. The registered person on whose goods (inputs or capital goads) job work is performed is called the “Principal” for the purposes of ofd section 143 of the CGST Act. The said section which encapsulates the provisiahs related to job work, provides that the registered principal may, without payment c4/tax, sand inputs or capital goods to a job worker for job work and, if required, from there subsequently to another job worker and so on. Subsequently, on completion of the job work (by the last job worker), the principal shall either bring back the goods to his place of business or supply (including export) the same directly from the place of business/premises of the job worker within one year in case of inputs or within three years in case of capital goods (except moulds and dies, jigs and fixtures or tools).

5. Scope/ambit of job work: Doubts have been raised on the scope of job work and whether any inputs, other than the goods provided by the principal, can be used by the job worker for providing the services of job work It may be noted that the definition ofjob work, as contained in clause (68) ofsection 2 of the CGST Act, entails that the job work is a treatment or process undertaken by a person on goods belonging to another registered person. Thus, the job worker is expected to work on  the goods sent by the principal and whether the activity is covered within the scope of job work or not would have to be determined on the basis of facts and circumstances of each case. Further, it is clarified that the job worker, in addition to the goods received from the principal, can use his own goods for providing the services ofjob work

8.4 Clarification: On conjoint reading of the relevant legal provisions, the following is clarified with respect to the issuance of challan, furnishing of intimation and other documentary requirements in this regard:

(ii)Where goods are sent from one job worker to another job worker: In such cases, the goods may move under the cover of a challan issued either by the principal or the job worker. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein the quantity and description of goods being sent. The same process may be repeated for subsequent movement of the goods to other job workers.

17. The next clarification vide its circular No. 126/45/2019-GST dated 22.11.2019, relied upon is regarding scope of notification entry at item (id) related to ‘job work’, under heading 9988 of notification No. 11/2017-CT (Rate) dated 28.6.2017. The relevant extracts of which are as under:

4. In view of the above, it may be seen that there is a clear demarcation between scope of the entries at item (id) and item (iv) under heading 9988 of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017. Entry at item (id) covers only job work services as defined in section 2 (68) of CGST Act, 2017, that is, services by way of treatment or processing undertaken by a person on goods belonging to another registered person. On the other hand, the entry at item (iv) specifically excludes the services covered by entry at item (id), and therefore, covers only such services which are carried out on physical inputs (goods) which are owned by persons other than those registered under the CGST Act.

18.  Now in terms of section 2(68) of the CGST Act, 2017, an activity can he held to be within the ambit of “job work” if [al treatment/process has to be undertaken and Ibl the goods should be belonging to another registered person. What therefore, needs to be verified is whether the applicant fulfils these two conditions. While examining this, what is significant is that

• BPCL shall pay to PLL for regasification or for its pay for if not used obligation;
• that in addition to payment of the fixed facility charges & regasification charges BPCL shall make necessary arrangements………

• that BPCL may with prior written consent of PLL anytime prior to finalization of the annual program in accordance with Article 5.3.1(c), nominate any of its Affiliates to use the Rcgasification services to be provided by PLL, for a specified period of time and for a specified quantity during a contract year, at its sole risk and expense.
• that during the course of personal hearing held on 8.4.2025, it was informed that they have subleased the facility of PLL.

A conjoint reading of the above leads us to a conclusion that the applicant in terms of his agreement with PLL pays re-gasification charges, fixed facility charges and is also obliged to pay ‘if not used’ charges. On weighing the contention of the applicant in this background, we find that the applicant is providing back-to-back job work to GAIL by getting their goods treated/processed through PLL. There is no dispute as far as the activity of PLL is concerned since the GAAR vide its order dated 11.8.2021 has already held the activity as job work. Now, the applicant is getting GAIL’ s LNG converted into RLNG through PLL in terms of its agreement dated 18.11.2021.

19. Further, a conjoint reading of the two agreements, viz dated 23.12.2013 and 11.8.2021, coupled with the fact that the applicant does not hold any ownership of the goods and that the GAAR vide its earlier order dated 11.8.2021 has already held the activity of the PLL as job work, we find merit in the averment of the applicant that their activity of providing service of regasification of LNG owned by GAIL/others through PLL, is a back to back job work and that the applicant adorns the role of a job worker of M/s. GAIL, in so far as this transaction is concerned.

20. The next averment raised by the applicant is that the service ought to be classified under 26(id) of notification No. 11/2017-CT (R). Since the LNG on which re-gasification is done belongs to GAIL who is a registered person, and also because the services are other than those falling under serial no. 26(i), ia), (ib), (ic) & (ica), we find that the service ought to be classified under 26(id) of notification No. I 1/2017-CT (R), as amended.

21. In view of the foregoing, we rule as under:

RULING 

[i] The applicant’s activity of providing service of regasification of LNG owned by GAIL/others amounts to rendering of service by way of job work within the meaning of section 2(68) of CGST Act, 2017 & GGST.

[ii] The said service of re-gasification by way of job work is classifiable under serial no. 26(id) of heading no. 9988 of notification No. 11/2017-CT(Rate) dated 28.6.2017,as amended & is chargeable to GST @ 12%.

Notes: 

¹Liquifed Nature Gas

²Agreement Dated: 23.12.2013

³ Gujarat Authority for Advance Ruling

⁴Agreement for subletting dated 18.11.2021

⁵ AIR 1989 SC 1167

⁶ STA No. 9/2009

⁷ 2023 (386) ELT 214

⁸ 2018 (364) ELT 664 (Tri)

⁹2017 (353) ELT 251 (Fri)

¹⁰ 2006 (197) ELT 324 (SC)

¹¹ General Rules of Interpretation

¹² 2012 (278) ELT 581 SC

¹³008 (12) STR 416 SC

¹⁴ 2018 (19) Gs^–ri, 119

¹⁵ Order No. MAH/AAAR/SS-RF0IA/19-20 dtd 13.1.2020

¹⁶ 2023 (12) TMI 889 (AAR-Odi)

¹⁷ 1985 (8) TMI 71 (SC)

¹⁸ 2021 (12) TMI 165 AAAG Guj

¹⁹ 2020 (6) TMI 704 (AAAR-Mah)

²⁰ 2020 (42) GSTI, 256 (AAR-GST TN)

²¹ Petronet LNG Limited