No separate GST registration is required for execution of a contract – AAR Karnataka
by ReinHeads Team | Apr 24, 2020
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No separate GST registration is required for execution of a contract – AAR Karnataka
| Facts |
- T& D Electricals (‘the Applicant’) is registered under Goods and Services Tax Act (‘GST’) as a works contractor and wholesale supplier in Jaipur, Rajasthan
- The Applicant has been awarded a contract by M/s Shree Cement Limited, Rajasthan for electrical, instrumentation and IT jobs (works contract) at township, M/s Karnataka Cement Project (a unit of Shree Cement Ltd.,) in the State of Karnataka. The job involves supply of material and installation, testing and commissioning of the same
- The Applicant has to arrange all the required material, tools and tackles with manpower/ electrician/ technician, etc., as per the contract
- Invoices of the Applicant have to be addressed to M/s Karnataka Cement Project, Karnataka
- The Applicant does not have any premises in Karnataka and M/s Shree Cement Ltd. will only provide a temporary small space for office and storage (without any formal documents)
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| Issue before the Authority for Advance Ruling (‘AAR’) |
- Whether separate registration is required by the Applicant in Karnataka? If yes, whether agreement would suffice as an address proof since the Applicant does not have any other proof?
- If registration is not required in Karnataka and if the Applicant purchases goods from dealers of Rajasthan and directly ship from such dealer’s premises to township at Karnataka, whether the dealers would charge Central Goods and Service Tax (‘CGST’) and State Goods and Service Tax (‘SGST’) or Integrated Goods and Service Tax (‘IGST’)?
- If registration is not required in Karnataka and if the Applicant purchases goods from dealers of Karnataka, whether the dealers would charge IGST or CGST & SGST?
- What documents would be required with transporter to transit/ ship material at Karnataka site from dealer/ supplier of Rajasthan and Karnataka?
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| Discussion and Findings of the AAR |
- The Applicant intends to supply goods and services from their principle place of business in Rajasthan
- The Applicant has only one principle place of business in Rajasthan (which is registered under GST) and does not have any other fixed establishment. Therefore, the location of the Applicant is in the State of Rajasthan
- There is no requirement to obtain a separate registration in Karnataka for execution of the contract. However, the Applicant is at the liberty to obtain the said registration, if they are able and intend to have a fixed establishment at the project site in Karnataka
- Where the goods are purchased from dealer of Rajasthan and shipped directly to project site at Karnataka, both the supplier (i.e. dealer) and the recipient of goods (i.e. the Applicant) are situated in Rajasthan and hence:
- The Rajasthan dealer has to charge CGST and SGST under ‘bill to ship to transaction’ in terms of Section 10(1)(b) of the IGST Act 2017;
- The Applicant has to charge IGST in their invoice addressed to M/s Karnataka Cement Project, Karnataka
- Where the goods are purchased from dealer of Karnataka and shipped directly to project site at Karnataka, the supplier (i.e., dealer) and the recipient of goods (i.e. the Applicant) are situated in different States of Karnataka and Rajasthan respectively and hence:
- Dealer in Karnataka has to charge IGST under bill to ship to transaction in terms of Section 10(1)(b) of the IGST Act 2017;
- The Applicant has to charge IGST in their invoice addressed to M/s Karnataka Cement Project, Karnataka
- With respect to documentation to be carried by the transporter of goods, no ruling is given as it does not get covered under Section 97(2) of the CGST Act 2017
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