2018 (9) TMI 694 - AAR - GST

Requirement to take registration - Works Contract - Place of supply of service - construction of cold storages at various parts of Country - appellant are expecting to do some construction work in the state of Rajasthan whereas they are located in the state of Gujarat and registered there in GST - whether the appellant is required to take registration in the state of Rajasthan? Held that - As per Para 6 (a) of Schedule II to the CGST Act, 2017, works contracts as defined in section 2(119) of the CGST Act, 2017 shall be treated as a supply of services. Thus, there is a clear demarcation of a works contract as a supply of service under GST Act - As per section 12(3)(a) of IGST Act, 2017 in case of Works Contract Services Place of supply shall be the location at which the immovable property (construction site) is located. Ruling - A supplier of service will have to register at the location from where he makes Taxable supplies or is supplying Taxable services if his aggregate turnover in a financial year exceeds twenty lakh rupees (ten lakh rupees in any of special category states) While supplying services if the supplier of services (i.e. applicant who in the given case is a Works Contractor and is registered in State of Gujarat) has any place of business/office in the State of Rajasthan i.e. has a fixed establishment for operation in State of Rajasthan (place where the services are to be provided) then he is required to get himself registered in State of Rajasthan.

Summary

Issues involved: Registration requirements under GST for a company engaged in construction across different states.

Analysis:

1. Issue 1 - Registration Requirement in Multiple States:
M/s. Jaimin Engineering Private Limited, a construction company, sought clarification on the GST registration requirement as they operate in Gujarat but plan to undertake construction work in Rajasthan. The company believed they were not obligated to register in Rajasthan despite conducting taxable activities there. The key contention was whether registration in every state of operation was mandatory.

2. Personal Hearing:
During the personal hearing, the company's Authorized Representative reiterated their stance, emphasizing that the case should be decided based on their initial submission.

3. Findings and Analysis:
The judgment referred to the definition of works contracts under the CGST Act, categorizing them as a supply of services. It highlighted that the location of the supplier of services is crucial, as per Section 2(15) of the IGST Act. The ruling clarified that a Works Contractor's location is determined by the state of their principal place of business unless they have a fixed establishment where services are provided. The judgment also cited Section 12(3)(a) of the IGST Act, which specifies the place of supply for Works Contract Services as the location of the immovable property. Furthermore, it reiterated the registration liability under Section 22(1) of the CGST Act based on aggregate turnover.

4. Conclusion:
The ruling concluded that a service supplier must register in the state where taxable supplies are made if their aggregate turnover exceeds the specified threshold. Additionally, if a service provider has a fixed establishment in a state where services are rendered, registration in that state is mandatory, even if the principal place of business is elsewhere. This decision clarified the registration obligations for companies operating across multiple states under the GST framework.