In ORDER No. MAH/AAAR/DS-RM/14/2022-23-AAR- Project management consultancy services provided by Appellant through professionals are in nature of professional and technical services which would attract 18% GST: Maharashtra AAR
Members-D.K. Srinivas and Rajeev Kumar Mital [03-01-2023]

Read Order: IN RE: v. M/s. Worley Services India Pvt. Ltd

Mansimran Kaur

Mumbai, February 6, 2023: In order to classify an activity within the ambit of the heading 9986 of the SAC, it is imperative that such services are required to be provided inter alia in support to mining, the Maharashtra Bench of the Appellate Authority for Advance Ruling has observed.

The Central Tax Member-D.K. Srinivas and State Tax Member- Rajeev Kumar Mital dismissed the present appeal by observing that the impugned services provided by the Appellant would merit classification under SAC 998349 bearing description Other technical and scientific services nowhere else classified, and accordingly merit entry at item (ii) of Sl. No. 21 of the Rate Notification bearing the description Other professional, technical and business services other than (i) and (ia) above and serial number 38 below, attracting GST at the rate of 18% (CGST@9%+SGST@9%). 

The present appeal was instituted under Section 100 of the Central Goods and Services Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 by M/s. Worley Services India Pvt. Ltd.,the appellant  against the Advance Ruling pronounced by the Maharashtra Authority for Advance Ruling. 

Factual matrix of the case was such that the Appellant was a company registered under the Indian Companies Act, 1956. The Appellant was a part of Worley Parsons Limited, which is a global engineering company providing project delivery and consulting services to the resources and energy sectors and other complex process industries.

The Appellant was inter alia engaged in the provision of project management consultancy services. The Appellant was registered under the Maharashtra Goods and Service Tax Act, 2017 

The Appellant has been one of the world's largest engineering procurement and construction management service providers engaged in the oil and gas, chemicals, metals and minerals sector. The PMC services were provided to various natural oil and gas companies as well as oil and gas mining and exploration companies.

Vedanta Limited, a globally diversified natural resources company has been engaged in the business of exploration and mining of various natural resources.

 VL entered into separate agreements with the Appellant in relation to the two projects for supply of PMC services. The PMC services were customized and tailor made to suit the requirements of VL and further require extensive technical and sound expertise. As per the agreements, the Appellant was required to continuously review, monitor, manage and control all aspects of the execution of the Projects on behalf of VL to complete it with quality, on time and within the approved cost.In relation to the aforesaid scope of work, the Appellant raised invoices on VL for the PMC services provided.

In view of the above, the Appellant approached the MAAR seeking advance ruling on the questions whether the services provided by the Appellant are classified under SI No. 24(ii) of heading 9986 of the Rate Notification as Support services to exploration, mining or drilling of petroleum crude or natural gas or both' under SAC 998621 and attracts GST@12% in terms of SI. No. 24(ii) of Rate Notification alternatively and whether the services provided by the Appellant are classified under S No. 21(ia) of heading 9983 of the Rate Notification as Other professional, technical and business services relating to exploration, mining or driling of petroleum crude or natural gas or both' and attracts GST@ 12% in terms of SI. No. 21(1a) of Rate Notification. 

Thereafter, the MAAR passed the order and held that the services provided by the Appellant are neither covered under SI. No. 24(ii) nor under SI. No. 21(ia) of Rate Notification. 

 Aggrieved by the impugned order passed by the MAAR, the Appellant filed the present Appeal.

After considering the submissions, the Authority noted  that the services provided by the Appellant were in the nature of support services. In order to classify the said activity within the ambit of the heading 9986 of the SAC, and such services were required to be provided inter alia in support to mining. It is pertinent to note that the term 'mining' has not been defined under the CGST Act and the Rate Notification, the Authority added. 

In light of above, the Authority stated that the support services provided by the Appellant were integrally connected to the activity of mining and therefore, the supply of services provided by the Appellant is squarely covered within the ambit of SI. No. 24(i) of heading 9986 of the Rate Notification under SAC 998621.

The Authority proceeded to classify the impugned services under the proper service head and determine the rate of tax. In this regard, the Authority observed that the impugned services provided by the Appellant through their professionals were in the nature of professional and technical services as the said impugned services provided by them indeed require technically qualified and trained professionals and staff. 

Thus, the Authority concluded by observing that the impugned services provided by the Appellant will merit classification under SAC 998349 bearing description Other technical and scientific services nowhere else classified, and accordingly merit entry at item (ii) of Sl. No. 21 of the Rate Notification bearing the description Other professional, technical and business services other than (i) and (ia) above and serial number 38 below, attracting GST at the rate of 18% (CGST@9%+SGST@9%). 

The Authority thus upheld the impugned order wherein it was held that the services provided by the Appellant are neither covered under SI. No. 24(ii) nor under Sl. No. 21(ia) of the Rate Notification. As regards the classification of the impugned services, it was held that the impugned services of project management consultancy services provided the Appellant would merit classification under the SAC 998349 bearing description "Other technical and scientific services” nowhere else classified, attracting GST at the rate of 18% (CGST @9% +SGST @9%).