18% GST Applicable On Services Of Project Management Consultancy Services: Maharashtra AAAR

The Maharashtra Appellate Authority for Advance Ruling (AAAR) has ruled that project management consulting services are subject to 18% GST.

The two-member bench of D.K. Srinivas and Rajiv Kumar Mittal has upheld the AAR’s ruling and observed that services provided through their professionals are in the nature of professional and technical services as the services provided require technically qualified and trained professionals and staff. Thus, the services provided by the appellant will merit classification under SAC 998349 with the description "Other technical and scientific services."

The appellant is part of Worley Parsons Limited, which is a global engineering company providing project delivery and consulting services to the resources and energy sectors and other complex process industries. The Appellant has a workforce of more than 4,500 professionally qualified people in India who provide PMC and EPCM services to local and international customers. The PMC services are provided to various natural oil and gas companies as well as oil and gas mining and exploration companies.

The applicant has sought an advance ruling on the issue of whether the services provided by the appellant are classified under SI No. 21(ia) of heading 9983 of the rate notification as "Other professional, technical, and business services relating to exploration, mining, or drilling of petroleum crude or natural gas or both" and attract 12% GST.

The AAR ruled that professional, technical, and business services supplied by the appellant to VL are clearly covered under residual entry no. 21(ii) of the rate notification, attracting tax at the rate of 18%.

The appellant contended that they are carrying out the functions pertaining to the management and supervision of the project that should otherwise have been carried out by the appellant’s client, but have been outsourced to them in terms of the agreement entered into between them. Therefore, they are providing support services to their clients.

The appellant argued that because their services are related to projects that will aid in the expansion of their client's mining activities, they should be construed as "support services to exploration, mining, or drilling of petroleum crude or natural gas or both."

The AAAR held that the services provided by the appellant are not related to the exploration, mining, or drilling of petroleum, natural gas, or both.

Applicant’s Name: M/s. Worley Services India Pvt. Ltd.

Date: 03.01.2023

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