CBIC clarifies on scope of support services to exploration, mining or drilling of petroleum crude or natural gas or both

Oct 14, 2019 | by Avantis RegTech Legal Research Team


The Central Board of Indirect Taxes and Customs (CBIC) on October 11, 2019, has given clarification on scope of support services to exploration, mining or drilling of petroleum crude or natural gas or both.

Whereas, CBIC received the representation from trade seeking clarification on the scope of the entry “services of exploration, mining or drilling of petroleum crude or natural gas or both” at Sr. No. 24 (ii) of heading 9986 in Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017.

However, most of the activities associated with exploration, mining or drilling of petroleum crude or natural gas fall under heading 9986. A few services particularly technical and consulting services relating to exploration also fall under heading 9983. Therefore, following entry has been inserted under heading 9983 with effect from October 01, 2019 vide Notification No. 20/2019- Central Tax(Rate) dated September 30, 2019:

(ia) Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both.

Therefore, CBIC clarified that the scope of the entry at Sr. 24 (ii) under heading 9986 of Notification No. 11/2017- Central Tax (Rate) will be governed by the explanatory notes to service codes 998621 (Support services to oil and gas extraction) and 998622 (Support services to other mining n.e.c.) of the Scheme of Classification of Services.

It is further clarified that the scope of the entry at Sr. No. 21 (ia) under heading 9983 of Notification No. 11/2017- Central Tax (Rate) inserted with effect from October 01, 2019 vide Notification No. 20/2019- CT(R) will be governed by the explanatory notes to service codes 998341 (Geological and geophysical consulting services) and 998343 (Mineral exploration and evaluation) of the Scheme of Classification of Services.

Thus, services which do not fall under the said entries under heading 9983 and 9986 of the said Notification will be classified in their respective headings and taxed accordingly.

[Circular No. 114/33/2019-GST]


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