Notification No. 16/2019 - Central Tax (Rate) Explained

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Notification No. 16/2019 - Central Tax (Rate): Seeks to amend notification No 3/2017- Central Tax (Rate) dated 28.6.2017 so as to extend concessional CGST rates to specified projects under HELP/OALP, and other changes.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.3/2017- Central Tax (Rate), dated the 28th June, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 675(E) dated the 28^th June, 2017, namely: -

In the said notification, -

in the TABLE, against S. No. 1, in column (3), after item (5), the following item shall be inserted, namely: -

“(6) Petroleum operations or coal bed methane operations undertaken under specified contracts under the Hydrocarbon Exploration Licensing Policy (HELP) or Open Acreage Licensing Policy (OALP)”;

in the ANNEXURE, against Condition No. 1, in clause (e), the following proviso shall be inserted, namely: -

“Provided that where the said goods so supplied are sought to be disposed of in non- serviceable form, after mutilation, the recipient of outward supply or the transferee, as the case may be, may at his option, pay the tax at the rate of 9 per cent. on transaction value of such goods subject to the condition that the recipient of outward supply or the transferee,

as the case may be, produces before the Deputy Commissioner of Central tax or the Assistant Commissioner of Central tax or the Deputy Commissioner of State tax or the Assistant Commissioner of State tax, as the case may be, having jurisdiction over the supplier of goods, a certificate from a duly authorized officer of the Directorate General of Hydro Carbons in the Ministry of Petroleum and Natural Gas, Government of India, to the effect that the said goods are non-serviceable and have been mutilated before disposal.”.

2. This notification shall come into force on the 1^st day of October, 2019.

(Ruchi Bisht)
Under Secretary to the
Government of India

📚 Frequently Asked Questions (FAQs): Notification No. 16/2019 - Central Tax (Rate)

Q1: What is Notification No. 16/2019 – Central Tax (Rate)?

Answer:
It amends Notification No. 3/2017 – Central Tax (Rate) to extend concessional CGST rates to petroleum and coal bed methane operations under HELP/OALP, and clarifies GST on disposal of non-serviceable goods.

Q2: From which date is Notification No. 16/2019 applicable?

Answer:
The notification is effective from 1 October 2019.

Q3: Which projects are newly covered for concessional CGST?

Answer:
Projects involving petroleum operations or coal bed methane operations executed under:
HELP (Hydrocarbon Exploration Licensing Policy), and
OALP (Open Acreage Licensing Policy).

Q4: What is the benefit of concessional CGST for these projects?

Answer:
Eligible supplies enjoy lower CGST, reducing project costs and improving cash flow for exploration and production activities.

Q5: Does this notification change the base concessional notification?

Answer:
No. It amends Notification No. 3/2017 by expanding eligible activities and adding procedural clarity—the concessional framework remains intact.

Q6: What change is made regarding disposal of non-serviceable goods?

Answer:
On disposal after mutilation, the recipient/transferee may opt to pay GST @ 9% on transaction value, subject to certification from DGH confirming non-serviceability and mutilation.

Q7: Who issues the certification for non-serviceable goods?

Answer:
A duly authorised officer of the Directorate General of Hydrocarbons (DGH) in the Ministry of Petroleum & Natural Gas.

Q8: Is the 9% tax option mandatory on disposal?

Answer:
No ❌. It is optional, available only when conditions are met and certification is produced to the jurisdictional tax authority.

Q9: Which authority must receive the DGH certificate?

Answer:
The certificate must be produced before the jurisdictional Deputy/Assistant Commissioner of Central or State Tax, as applicable.

Q10: Can you share a real-life example?

Answer:
📌 Example:
A supplier provides equipment to an OALP petroleum project at concessional CGST. Later, non-serviceable parts are mutilated and sold as scrap. With a DGH certificate, the buyer may opt to pay GST @ 9% on the scrap value.

Q11: Does this affect Input Tax Credit (ITC)?

Answer:
ITC availability depends on the taxability of the outward supply and Section 16/17 conditions. Correct classification and documentation are crucial.

Q12: Are suppliers required to change invoicing practices?

Answer:
Yes, where applicable. Invoices should reflect concessional rates for eligible HELP/OALP supplies and proper tax on disposal transactions.
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Q13: Does this notification apply uniformly across India?

Answer:
Yes ✅. Corresponding SGST notifications mirror the change, making it nationwide.

Q14: Who should review this notification carefully?

Answer:
Oil & gas operators under HELP/OALP
EPC contractors and equipment suppliers
Logistics and services vendors to petroleum projects

Q15: What compliance steps should businesses take now?

Answer:
Verify project eligibility under HELP/OALP
Update rate masters and contracts
Maintain DGH certification for disposals
File returns accurately
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