Home» Circulars» Gst Clarification Regarding Applicability Of Gst On Petroleum Gases Retained For The Manufacture Of Petrochemical And Chemical Products

 

 

 

Dear Members,   The Central Board of Indirect Taxes and Customs(CBIC) has issued Circular No.53/27/2018-GST dated 9th August, 2018 to clarify regarding applicability of GST on petroleum gases retained for the manufacture of petrochemical and chemical products.   We understand that CBIC has received representations from some of the manufacturers of  petrochemical and chemical products for clarification on applicability of GST on petroleum gases, which are supplied by oil refineries to them on a continuous basis  through dedicated pipelines, while a  portion of the raw material is retained by these manufacturers (recipient of supply), and the  remaining quantity is returned to the oil refineries.  In this regard, an issue has arisen as to whether in this transaction GST would be leviable on the whole quantity of the principal raw materials supplied by the oil refinery or on the net quantity retained by the manufacturers of petrochemical and chemical products.   In this regard,  CBIC has issued the above-said circular whereby it is clarified that, in the aforesaid cases, GST will be payable by the refinery only on the net quantity of petroleum gases retained by the recipient  manufacturer for the manufacture of petrochemical and chemical products.   Though, the refinery would be liable to pay GST on such returned quantity of petroleum gases, when the same is supplied by it to any other person.  It is reiterated that this clarification would be applicable mutatis mutandis on other cases involving supply of goods, where feed stock is retained by the recipient and remaining residual material is returned back to the supplier. The net billing is done on the amount retained by the recipient.   Concerned members are requested to take note of this clarification.  The above-said circular is  available for download/ reference using hyperlinks provided below-   53/2018 View(248 KB) 09-08-2018 F.No.354/255/2018-TRU (Part-2) Circular No. 53/27/2018-GST dated 09.08.2018 i.r.o. clarification regarding applicability of GST on petroleum gases retained for the manufacture of petrochemical and chemical products   Thanking you,   Yours faithfully,   (S.G BHARADI) EXECUTIVE DIRECTOR CHEMEXCIL