18% GST applicable on project management service provided to Vedanta Limited: Benefit of reduced rate for service of exploration/mining/drilling petroleum crude not available

The Oil & Gas Division of Vedanta Limited (VL), was awarded exploration licenses for onshore and off shore OLP blocks by the Government of India.

The applicant, a Project Management Consultancy (PMC) company has been engaged by VL, by way of contract, to plan, monitor & track project progress and validate Execution Contractor deliverables. The applicant’s scope of work includes: project planning by working with Execution Contractor and VL, preparing and timely implementing the project plan; to update and realign the project plan with the Execution Contractor and VL; to monitor and manage overall project progress, track, report project progress, exceptions and cost, manage project risk; review planning & progress measurement with the Execution contractor and support staff, validate invoices submitted by the Execution Contractor, etc.; supervise quality audit, certification compliance, audit report, etc. and act as an enabler for VL to ensure timely project execution ; to be responsible for ensuring that, ground level activities are executed on time as per plan and issues/risk are resolved with the key stakeholders, etc.

Question:

Whether the project management consultancy services provided by the applicant to Vedanta Limited (Division: Cairn Oil & Gas) would be liable to GST at the rate of 12% from January 2018 under serial no. 21(ia) i.e. under Service Accounting Code (“SAC”) 9983 stating “Other professional, technical and business services”, of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017, as inserted vide Notification No. 20/2019-Central Tax (Rate), dated 30.09.2019 since the said amendment is clarification to the amendment made vide Notification No. 1/2018 – Central Tax (Rate) dated 25 January 2018 reducing GST rate for service of exploration, mining or drilling of petroleum crude or natural gas or both to 12%

Ruling:

The project management consultancy services provided by the applicant to Vedanta Limited (Division: Cairn Oil & Gas) are covered under Sr. No 21 (ii) of Notification No. 11/2017-CT(R) dated 28.06.2017 as amended and would be liable to tax at 18% GST.

To Read Ruling Download PDF Given Below: