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The supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant’ under the contract do not qualify and classifiable as ‘composite supply’.

Authority for Advance Ruling — Taxability on supply of mud engineering services – The applicant is a global service provider, engaged in providing various oilfield services to Exploration and Production companies across the globe. The applicant sought an advance ruling as to (a) whether the supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant under the Contract qualify as composite supply; (b) if yes, then whether the supplies made under the Contract merits classification under Entry 9986 (ii) - Service of exploration, mining or drilling of petroleum crude or natural gas or both and subject to GST at the rate of 12% / 18% as the case may be; (c) if no, then whether such supply of mud chemicals and additives on consumption basis at OIL India’s location in India provided under the Contract qualify for concessional GST rate of 5% against an Essentiality Certificate (EC) under Notification No. 50/2017-Customs dated 30 June 2017.
Held that:- The Hon’ble Authority for Advance Ruling held that the supply of mud engineering services along with supply of imported mud chemicals and additives provided on consumption basis by the Applicant under the Contract does not qualify as composite supply. The benefits under referred Customs Notification is available to supply of such goods at the time of their importation subject to fulfilment of description, tariff item, lists and conditions specified therein and subject to the satisfaction of the Proper Officer.—Halliburton Offshore Services Inc. (Oil India), In Re… [2020] 24 TAXLOK.COM 056 (AAR-AP)