Case Title | Halliburton Offshore Services INC |
Court | Andhra Pradesh |
Honorable Judges | Member Peeyush Kumar & Member Naresh Penumaka |
Citation | 2020 (9) GSTPanacea 19 HC Andhra Pradesh AAAR/AP/05(GST)/2020 |
Judgement Date | 28-September-2020 |
Council for Petitioner | Prasad Paranjape |
Council for Respondent | NA |
Section | Section 101 |
In Favour of | In Favour of Assessee |
The Andhra Bench of Member Peeyush Kumar & Member Naresh Penumaka has held that in the case of Innamuri Gopalan v. State of Andhra Pradesh, [1963] 2 SCR the Honourable Supreme Court held that the Operation of the notifications had to be judged not by the object which the rule making authority had in mind but by the words which it had employed to effectuate the legislative intent.” In view of the above discussions, it is concluded that The Essentiality certificates prescribed under the said two notifications have to be furnished separately to avail the benefit of the said notifications.
FACTS OF THE CASE
The appellant is engaged in supply of comprehensive range of oilfield related services such as drilling services, exploration and mining related services, etc. to oil exploration and production companies across the globe
The main contention on behalf of the appellant is that the case fell within the language of the two notifications, one for import of drill bits into India under serial no. 404 of Notification No. 50/2017-Customs, dated 30 June 2017 and another for indigenous movement under Notification No. 3/2017-Central Tax (Rate), dated 28 June 2017 under the IGST/CGST Acts respectively.
There is no requirement to obtain Two separate Essentiality Certificates from the same Authority, i.e., Director General of Hydrocarbons one at the time of import and another for Interstate, Intra State supply of the same under the GST Laws, to entitle him for claiming exemption / concession rate of Tax under both the enactments.
One of the goods supplied by the appellant in the course of supplying drilling services is drill bits
The appellant was awarded a contract by ONGC to supply drill bits on consignment basis i.e. sale on approval basis at ONGC`s twelve different locations based on the call out orders received from ONGC
Pursuant to the above, the Appellant imports drill bits and avails the benefit under Sr.404 of Notification No.50/2017- Cus. Dt: 30.06.2017. Subject to satisfying the conditions at Sr. No. 48, i.e. on filing the Essentiality certificate obtained from the Director General of Hydrocarbons, Noida.
Accordingly the Appellant pays total customs duty at the rate of 5% i.e., Basic Customs Duty (`BCD`)-0% + Integrated Goods and Services Tax (“IGST”)-5% on the specified Goods
The appellant charged and deposited GST at the rate of 18% under the HSN 82071900 for the supply of the imported bits at the price agreed in the contract
In the above circumstances the appellant approached the Advance Ruling Authority-Andhra Pradesh for Ruling on the following queries
In the above circumstances the appellant approached the Advance Ruling Authority-Andhra Pradesh for Ruling on the following queries
- Import of drill bits into India; and
- Indigenous movement from the port of import to ONGC`s location
1) If two supplies are involved in the above mentioned transaction, then whether two Essentiality Certificates (`EC`) are required to be issued i.e.
The Authority for Advance Ruling Andhra Pradesh in ruling orders in AARNo.07/AP/GST/2020 dated 25.02.2020 held:
- That the Import and subsequent Supply to ONGC on consignment basis i.e. on approval basis are two distinct Supplies as prescribed under the Customs Act and GST Acts
- As the Import and Supply to ONGC are distinct supplies, the applicant needs to furnish different Essentiality Certificates that is to say one at the time of import to the Custom Authorities and another at the time of supply to ONGC to the GST Authorities, to avail the Concession/Exemption.
Aggrieved by the order of Authority for Advance Ruling dated 25.02.2020 the Appellant has filed the present Appeal, inter alia
COURT HELD
Considering the facts as recorded, held that In the case of Innamuri Gopalan v. State of Andhra Pradesh, [1963] 2 SCR the Honourable Supreme Court held that the State was “possibly right in the submission that the object behind the framers of the notification was to avoid double taxation but the operation of an enactment or of a notification has to be judged not by the object which the legislature or the notifying authority, as the case may be, may have had in mind but by the words which it has employed to effectuate the legislative intent”.
“But, the Operation of the notifications had to be judged not by the object which the rule making authority had in mind but by the words which it had employed to effectuate the legislative intent.”
In view of the above discussions, it is concluded that The Essentiality certificates prescribed under the said two notifications have to be furnished separately to avail the benefit of the said notifications
ANALYSIS OF THE JUDGEMENT
The present issue relates to requirement of Essentiality Certificate for claiming concessional rate of Tax /exemption under different Tax Authorities for distinct and different supplies involved i.e. one at the time of import under Customs and another during the course of local sale/supply under Central and state enactments
In the case of Innamuri Gopalan v. State of Andhra Pradesh, [1963] 2 SCR the Honourable Supreme Court held that the State was “possibly right in the submission that the object behind the framers of the notification was to avoid double taxation but the operation of an enactment or of a notification has to be judged not by the object which the legislature or the notifying authority, as the case may be, may have had in mind but by the words which it has employed to effectuate the legislative intent”.
The same was reaffirmed in the case Hansraj Gordhandas v. H.H. Dave & Ors., [1969] 2 SCR 260 “But, the Operation of the notifications had to be judged not by the object which the rule making authority had in mind but by the words which it had employed to effectuate the legislative intent.
” In view of the above discussions, it is concluded that The Essentiality certificates prescribed under the said two notifications have to be furnished separately to avail the benefit of the said notifications
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