In a major relief to common people, the Central Government notified exemption to its share of profit petroleum paid to the Centre from the Goods and Services Tax (GST).
As per the Notification, the Central Government exempted the intra-State supply of services by way of grant of license or lease to explore or mine petroleum crude or natural gas or both, from so much of the central tax as is leviable on the consideration paid to the Central Government in the form of Central Government’s share of profit petroleum as defined in the contract entered into by the Central Government in this behalf.
The production sharing contracts (PSCs) signed for exploration and development of oil fields require operators to pay a pre-determined share of the surplus petroleum output to the Centre as a form of royalty.
Such profit petroleum is subject to GST as it has been construed as a payment made by firms for a service.
Subscribe Taxscan Premium to view the Judgment
