2022 (12) TMI 807 - AAAR - GST

Place of supply - supplier of service and recipient of service are located in India - immovable property located outside India - construction of Institute of Security and Law Enforcement studies at Addu City in Maldives, constructed for Government of Maldives under an Memorandum of Understanding between India and Maldives - recipient of service - place of supply in respect of the works contract for setting up of the Institute of Security and Law Enforcement Studies at ADDU City in Maldives - time limitation. HELD THAT - In order to determine, the Place of Supply, it is necessary to determine the supplier and recipient of the supply and the location of the supplier and recipient. In this context, it is necessary to examine the definitions of Supplier and Recipient as per the Provisions of the CGST Act, 2017 Section (2), Sub-section (105) of the Act defines supplier as Supplier in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied - Here, the supply of service (works contract service), the agreement which enforceable by law is entered into between M/s Sri Avantika Contractors (I) Limited and M/s NBCC Limited, New Delhi. Hence, the appellant M/s Sri Avantika Contractors (I) Limited, will be the supplier of Works contract service. On careful perusal of the definition of person under subsection (84) of section 2 of the CGST Act, 2017 and the definitions of company and foreign company under Section 2 of the Companies Act, 2013, it is observed that a company incorporated in India and a foreign company incorporated outside India, are separate person under the provisions of CGST Act and accordingly, are separate legal entities. Thus, a company incorporated in India and a body corporate incorporated by or under the laws of a country outside India (which is also referred to as a foreign company under the Companies Act) are separate persons under CGST Act, and thus are separate legal entities - the registered place of business of M/s Avantika Contractors (I) Limited, Maldives cannot be considered as fixed establishment of M/s Avantika Contractors (I) Limited, India. The location of immovable property is outside India, therefore the Place of supply of services is location of the recipient i.e., Delhi as per the provisions of Section 12(3) of the IGST Act, 2017 - the transaction becomes an inter-state supply and is taxable under the provisions of Sec 7, sub-section (1) of the IGST Act, 2017.

Summary

Issues Involved:
1. Applicability of GST to the construction of the Institute of Security and Law Enforcement Studies at Addu City in Maldives.
2. Identification of the recipient of the service.
3. Determination of the place of supply for the works contract.

Issue-wise Detailed Analysis:

1. Applicability of GST to the Construction of the Institute of Security and Law Enforcement Studies at Addu City in Maldives:
The appellant, a works contractor, argued that the construction services provided in Maldives should not be subject to GST as the supply is outside India. The appellant contended that the recipient of the service is the Government of Maldives, and thus, the place of supply should be Maldives under Section 13(4) of the IGST Act, 2017. However, the appellate authority held that both the supplier (the appellant) and the recipient (National Buildings Construction Corporation Limited, NBCCL) are located in India. According to Section 12 of the IGST Act, the place of supply for services related to immovable property located outside India is the location of the recipient, which in this case is India. Therefore, the supply falls within the ambit of GST.

2. Identification of the Recipient of the Service:
The appellant claimed that the Government of Maldives is the recipient of the service since the building is ultimately for their use. However, the appellate authority found that the contract for construction was between the appellant and NBCCL, not directly with the Government of Maldives. The agreement and payments were made by NBCCL, which acts as the executive agency for the Government of India. Therefore, NBCCL is identified as the recipient of the service.

3. Determination of the Place of Supply for the Works Contract:
The appellant argued that the place of supply should be determined under Section 13 of the IGST Act, as the location of either the supplier or the recipient is outside India. However, the appellate authority determined that both the supplier and the recipient are located in India. The place of supply for services directly related to immovable property is governed by Section 12(3) of the IGST Act. Since the immovable property is located outside India, the place of supply is the location of the recipient, which is NBCCL in India. Thus, the transaction is considered an inter-state supply and is subject to GST.

Final Ruling:
1. The construction of the Institute of Security and Law Enforcement Studies at Addu City in Maldives falls within the GST net.
2. National Buildings Construction Corporation Limited, Delhi is the recipient of the service.
3. The place of supply for the works contract is determined under Section 12 of the IGST Act, with the location of the recipient being in India. Therefore, the supply is subject to GST.