Applicability of GST on Polybutylene Feedstock and Liquefied
Petroleum Gas Retained for the manufacture of Poly Iso Butylene and Propylene or Di-butyl
para Cresol
[Circular No. 29/3/2018-GST dated 25 January 2018]
Subject: Clarification regarding applicability of GST on Polybutylene feedstock and Liquefied
Petroleum Gas retained for the manufacture of Poly Iso Butylene and Propylene or Di-butyl
para Cresol
References have been received related to the applicability of GST on the Polybutylene feedstock and Liquefied Petroleum
Gas
retained for the manufacture of Poly Iso Butylene and Propylene or Di-butyl para Cresol.
2.
In
this context, manufacturers of Propylene or Di-butyl para Cresol and Poly Iso Butylene have stated that the principal raw materials for manufacture of such goods are Liquefied Petroleum Gas and Poly butylene feed stock respectively, 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, 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 Propylene or Di-butyl para Cresol and
Poly Iso Butylene.
3.
The GST Council in
its 25th meeting held on 18.1.2018 discussed this issue and recommended for issuance of a clarification stating that in such transactions, GST will be payable by
the
refinery
on the value of net quantity of polybutylene feedstock and
liquefied petroleum gas retained for the manufacture
of
Poly Iso Butylene and
Propylene or Di-butyl Para Cresol.
4.
Accordingly, it is hereby clarified that, in the aforesaid cases, GST will be payable by the refinery
only on the net quantity
of Polybutylene feedstock and Liquefied Petroleum
Gas
retained by the
manufacturer for the manufacture of Poly Iso Butylene
and Propylene or Di-butyl para Cresol . Though, the refinery would be liable to pay GST on such returned quantity
of Polybutylene feedstock and Liquefied
Petroleum Gas, when the same is
supplied by it to any other person.
5. This
clarification is issued in
the
context of the Goods and Service Tax (GST) law only and
past
issues, if any,
will be dealt in accordance with the law
prevailing at the
material time.
F.No.354/1/2018-TRU)