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The Central Board of Indirect Taxes and Customs clarifies the scope of the entry for services of exploration, mining, or drilling of petroleum crude or natural gas under heading 9986 and heading 9983 of Notification No. 11/2017-Central Tax (Rate). The scope is governed by the explanatory notes to the Scheme of Classification of Services. Services under heading 9986 follow service codes 998621 and 998622. Professional, technical, and business services under heading 9983 follow service codes 998341 and 998343 as inserted with effect from 1st October 2019. Services that do not fall under these entries receive classification in their respective headings and face taxation accordingly.
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Circular No. 114/33/2019-GST
F. No. 354/136/2019-TRU Government of India Ministry of Finance Department of Revenue Tax research Unit
Room No. 146G, North Block, New Delhi, the 11th October 2019
To,
The Principal Chief Commissioners/ Chief Commissioners (All)/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Clarification on scope of support services to exploration, mining or drilling of petroleum crude or natural gas or both – reg.
Representations have been received from trade seeking clarification on the scope of the entry "services of exploration, mining or drilling of petroleum crude or natural gas or both" at Sr. No. 24 (ii) of heading 9986 in Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017.
"(ia) Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both"
3 Explanatory Notes to the Scheme of Classification of Services adopted for the purposes of GST, which is based on the United Nations Central Product Classification describe succinctly the activities associated with exploration, mining or drilling of petroleum crude or natural gas under heading 9983 and 9986.
3.1 The relevant Explanatory Notes for Heading 9983 are as follows:
998341 Geological and geophysical consulting services This service code includes provision of advice, guidance and operational assistance concerning the location of mineral deposits, oil and gas fields and groundwater by studying the properties of the earth and rock formations and structures; provision of advice with regard to exploration and development of mineral, oil and natural gas properties, including pre-feasibility and feasibility studies; project evaluation services; evaluation of geological, geophysical and geochemical anomalies; surface geological mapping or surveying; providing information on subsurface earth formations by different methods such as seismographic, gravimetric, magnetometric methods & other subsurface surveying methods
This service code does not include
998343 Mineral exploration and evaluation This service code includes mineral exploration and evaluation information, obtained on own account basis
Note: This intellectual property product may be produced with the intent to sell or license the information to others.
3.2 The relevant Explanatory Notes for Heading 9986 are as follows:
998621 Support services to oil and gas extraction This service code includes derrick erection, repair and dismantling services; well casing, cementing, pumping, plugging and abandoning of wells; test drilling and exploration services in connection with petroleum and gas extraction; specialized fire extinguishing services; operation of oil or gas extraction unit on a fee or contract basis
This service code does not include:
998622 Support services to other mining n.e.c. This service code includes draining and pumping of mines; overburden removal and other development and preparation services of mineral properties and sites, including tunneling, except for oil and gas extraction; test drilling services in connection with mining operations, except for oil and gas extraction; operation of other mining units on a fee or contract basis
This service code does not include:
4.1 It is further clarified that the scope of the entry at Sr. No. 21 (ia) under heading 9983 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 inserted with effect from 1st October 2019 vide Notification No. 20/2019- CT(R) dated 30.09.2019 shall be governed by the explanatory notes to service codes 998341 and 998343 of the Scheme of Classification of Services.
4.2 The services which do not fall under the said entries under heading 9983 and 9986 of the said notification shall be classified in their respective headings and taxed accordingly.
Yours Faithfully,
Shashikant Mehta OSD (TRU)
