Petronet’s Activity of Re-gasification of LNG owned by its GST registered Customers amounts to rendering of Service by Job Work, 12% GST payable: AAR [Read Order]

The Gujarat Authority of Advance Ruling (AAR) ruled that Petronet’s activity of re-gasification of LNG owned by its GST registered customers amounts to rendering of service by Job Work and 12% GST payable.

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, regasifies it and supplies RLNG to the customers. The Appellant enters into Re-gasification Agreements (RAs) with the customers.

The applicant has sought the advance ruling on the issue 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 rendering of service by way of Job Work within the meaning of Section 2(68) of the CGST, 2017 and the GGST Act, 2017. If yes, then whether the said service of re-gasification by way of job work be classifiable under entry (id) of Heading No. 9988 at Sl. No. 26 of Notification No. 11/2017-CT (rate) dated 28.06.2017, as amended vide Notification No. 20/2019-CT (Rate) dated 30-09-2019 w.e.f. 01.12.2019 and be chargeable to CGST at the rate of 6%.

The coram of Sanjay Saxena and Arun Richard held that Petronet’s activity of re-gasification of LNG owned by its GST registered customers amounts to 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% .

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