The oil and gas sector is one of the most capital-intensive sectors. It is also a sector which is regulated by the government whose adverted policy is to ensure optimal exploration at competitive costs. It is perhaps being aware of these high costs that the Government had particularly carved out the specific entry no. 24 for the support services required in exploration, mining or drilling of oil and gas, and had consciously set out a benign rate of 12% instead of the usual rate of 18%. It is unfortunate that the tax authorities at the ground level are taking a contrary position. For a sector which ideally satisfies all requirements to be in GST and ironically remains excluded, such approach by tax authorities leads to a double whammy.
Source Mondaq
