GST Rate of 12% applicable on service of Regasification of LNG by BPCL: AAR
The Gujarat Authority for Advance Ruling issued decision No. GUJ/GAAAR/APR/2025/12 after BPCL applied on June 7, 2024. This company is run by Government of India and is based in Ahmedabad, Gujarat. It does business in Liquefied Natural Gas (LNG), gets it re-gasified and supplies the processed gas called RLNG to its customers.
BPCL has two important agreements. The first agreement includes a 2013 pact with Petronet LNG Ltd. (PLL) whereby BPCL sends LNG to PLL for regasification. PLL processes it and returns it as RLNG. The second agreement is with GAIL (India) Ltd., LNG belongs to GAIL but BPCL makes sures to processes it. BPCL does not own the gas; it just organizes the work and sends out invoices. GAIL takes delivery and manages the taxes.
In August 2021, the Gujarat AAR decided that PLL’s regasification of LNG owned by customers is considered ‘Job Work‘, which makes it taxable at 12% under GST. That prior decision matched with the current one in principle.
BPCL argued stating this arrangement is a classic back-to-back job work, where the goods always belong to GAIL, BPCL just coordinates through PLL, issues invoices and fulfills all the legal terms. They referred to Circular No. 38/12/2018‑GST and Circular No. 126/45/2019‑GST, which clarify job work rules even in multi-party setups.
The Gujarat AAR agreed and declared that BPCL’s service is really job work under Section 2(68). It falls under entry 26(id) of heading 9988 in Notification No. 11/2017‑CTR (as amended), making it subject to 12% GST.