12% GST on Activity of re-gasification of LNG owned by GST Registered Customers amounts to Rendering of Service by Way of Job Work: AAR [Read Order]

The Gujarat Authority of Advance Ruling (AAR) held that 12% GST on Activity of re-gasification of LNG owned by GST registered customers amounts to the rendering of service by way of Job Work.

The applicant, M/s. Petronet LNG Ltd. (PLL), submitted that it provides re-gasification services to its customers on the LNG owned by the customers, referred to as ‘Tolling’. In the ‘Tolling Model’, the Applicant receives the LNG belonging to the customers at its plant, stores it, re-gasifies it, and supplies RLNG to the customers. The Appellant enters into Re-gasification Agreements (RAs) with the customers. As per the RAs, the term ‘Re-gasification’ means the various activities namely reception by PLL of LNG Ships at the Unloading Port; receipt by PLL of LNG delivered by LNG Ship at the Custody Transfer Point; storage and re-gasification of such LNG at PLL’s Facilities; and transportation and delivery of RLNG by PLL to the Customer at the Custody Transport Point through pipelines which are connected through PLL’s plant.

The applicant has sought advance ruling on the issue of whether the applicant’s activity of providing service of regasification of LNG owned by its customers to convert to RLNG, from its Plant at Dahej, Gujarat would amount to the rendering of service by way of Job Work within the meaning of Section 2(68) of the CGST, 2017 and the GGST Act, 2017.

The Coram of Arun Saxena and Arun Richard ruled that Petronet’s activity of re-gasification of LNG owned by its GST registered customers amounts to the rendering of service by way of Job Work and merits to be covered at entry ‘id’ of Heading 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended, liable to CGST at 6%.