9911796707
TMI Blog2021 (11) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... &T, claimed to be a works contract, for erecting steel structure casted and bolted on ground in the civil foundation, at the site at Karwar, Karnataka. The scope of the contract involves (i) Procurement of structural steel from approved suppliers such as SAIL/JSPL/Tata (ii) Fabrication at GEW India factory premises, at NOIDA, as per the drawings (iii) Transportation of material and (iv) erection at Karwar site. 3. In view of the above, the applicant has sought advance ruling in respect of the following questions: 3.1 (a) When goods which requires movement from a different place to the work sites forming part of works contract and should we use or mention SAC as against HSN code in the accompanying Tax Invoice for the goods being moved? For the reason work order issued by main contractor in the name of a subcontractor mentioning only SAC for the reason the whole contract is classified as services by the main contractor and if SAC is used in tax invoice it might not be same in e-way bill for the goods which are carried in transport vehicle as there shall be HSN code and not SAC. (b) To corroborate the description as mentioned in the work order irrespective of description of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lumn 13 of the application, sought advance ruling in respect of the issues i.e. (i) classification of services and (iv) whether the applicant is required to be registered and hence the application is admissible under Section 97(2)(a) & (f) of the CGST Act 2017 respectively. 5. BRIEF FACTS OF THE CASE: The applicant furnishes the following facts relevant to the issue: 5.1 The applicant received a work order from L&T (Larsen & Toubro) to execute the works contract at Karwar job address LE200893-Seabird package MWC04-Larsen 8v Toubro Ltd., Inside Naval base, Karwar, Near Manzi' Creek, Chendia PO, Uttara Kannada district, Karwar, Karnataka-581308 vide the work order ##L573W0D1000106 dated 21-06-2021. 5.2 The aforesaid supply is in the nature of composite supply of goods and services involving supply, erection and installation of steel after fabrication used for harboring/anchoring of ships and classified as service under SAC 995416. 5.3 The entire structure is of steel and casted & bolted on ground in the civil foundation. The scope of the said supply involves (i) Procurement of structural steel from approved suppliers such as SAIL/JSPL/Tata (ii) Fabrication at GEW India factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-IGST (Rate) dated 28.06.2017 as amended, which may be disputed by the check post authorities for an incorrect classification & incorrect rate of tax and may become the subject matter of dispute on road and accordingly the vehicles may be intercepted and may end up in litigation. The applicant, quoting above, requested for ruling to accommodate the movement in supply of goods before installation and to charge the rate of tax as applicable to the works contract classified as service and what has to be mentioned in the invoice whether SAC or HSN. 6.2 The applicant, with regard to the second question submits their understanding / interpretation of law as under: The applicant, with regard to registration, submits that they raise invoice from their premises at Noida, Uttar Pradesh to L&T, Karnataka and the contracts which are billed from a state different from the state where actual work is performed amount to inter state transaction in terms of Section 7(3) of the IGST Act 2017. The applicant quoting the provisions of Section 12 (3) of the IGST Act 2017 submits that the services in the nature of works contract are covered under Section 12(3) supra and hence the place of supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UT. Further we are not able to buy the concept of completing a service at one place and declaring it to be delivered from another place, especially an immovable property related services just because the work order was issued on another state where the service provider is registered or having a place of business. The applicant, in view of the above, requests to enlighten them on the actual scenario on what line the GST Act was implemented and the consequences if a person fails to register in the state in which he executes the works contract as for as the revenue loss to the concerned state is concerned if GST Laws are destination based consumption tax, even though there is an exception to this in terms of Section 10(1)(b) of the IGST Act. 6.3 The applicant, with regard to the third question submits their understanding / interpretation of law as under: The applicant with regard to the third question states that they may employ or delegate the work by way of subcontract in Karnataka to various contractors to complete the work at the works site in Karwar, Karnataka and in such case they are of the view that the sub-contractors may raise the bills to them locally by treating their s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at their Noida premises, which is to be casted and bolted on the ground in the civil foundation. The applicant in this regard sought advance ruling in respect of the questions mentioned at para 3 supra. 11. The applicant though sought advance ruling in respect of three questions. We proceed to consider one question at a time and discuss. The first question is with regard to the HSN or SAC that need to be mentioned while transporting the steel structures fabricated at their Noida premises, to the work site at Karwar, as the L&T (main contractor) has directed them to mention SAC 995416, on consideration that the work awarded is in the nature of works contract service and is a composite supply. The applicant raised the question claiming to be covered under Section 97 (2) (a) of the CGST Act 2017, which is related to classification of goods or services or both. 11.1 In this regard a question was raised during hearing that held on 07.10.2021 that "in case the goods are supplied as part of the contract and for any reasons if the erection & installation of the said goods does not happen, who will be the owner of the said goods." The applicant, through their authorised representative v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question, in respect of which the applicant sought advance ruling, is whether the applicant is required to be registered in the state of Karnataka for execution of the work order which was issued by M/s L&T, Karnataka, on the applicant's premises registered at Noida, UP, from where the applicant raises the invoice. 12.1 In this regard a question was raised during hearing that "whether the applicant is planning to have an office in Karnataka". The applicant answered that they would like to have a house for stay purposes, which can be for their resident engineer or any other person who shall commute from any place within India to visit the work site for many purposes. The applicant stated that they shall not maintain books nor documents at such place nor prepare invoices from Karnataka, it will be purely kept at Noida office. Even otherwise also if they wish to take a registration from Karnataka, they still shall mention the address of Karnataka only for billing and all documents & books of accounts shall be preserved at Noida office, as they will not have any administrative staff nor accounting persons for the project at Karwar except the engineers and other persons who shall l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplier of services is the place of business of the applicant. It is also pertinent to note that the applicant has no fixed establishment in the State of Karnataka as on date. 14. Section 12 of the IGST Act 2017 determines the place of supply and specifically Section 12 (3) of the IGST Act is relevant to the impugned transaction & determines the place of supply of services directly in relation to immovable property in respect of any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work or any ancillary services shall be the location at which the immovable property is located or intended to be located and if the location of the immovable property is located or intended to be located outside India, the place of supply shall be the location of the recipient. Thus, in the instant case, the place of supply of services is the location at which the immovable property is located i.e. Karwar in Karnataka state. 15. Section 7(3) of the IGST Act 2017, which is appended below, determines the impugned transaction, claimed to be a supply of services, as a supply of services in the course of inter-state trade or commerce as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat "Notwithstanding anything contained in section 22 (1) of the CGST Act 2017, the Input Service Distributor, whether or not separately registered under the CGST Act, shall be required to be registered under the CGST Act 2017. Further Section 25 of the Act prescribes certain procedure for registration and specifically sub-section (1) stipulates that "Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every such State or Union territory in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed". 19. It could be seen from the definition under Section 2(61) of the CGST Act that the Input Service Distributor is an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit (ITC). Thus, to distribute the ITC, the supplier should obtain the Input Service Distributor registration for the premises from where they intend to distribute the credit. It is an admitted fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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