No separate GST registration for “Works Contract”: AAR

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The Applicant, M/s T & D Electricals is registered under the Goods and Services Act, 2017 and works as a contractor and wholesale supplier in Jaipur, Rajasthan. They have been awarded a contract by M/s Shree Cement Limited, Rajasthan for electrical, instrumentation and IT jobs (works contract) at the township of Karnataka Cement Project, which is a unit of Shree Cement Ltd.

The applicant intends to supply goods or services or both from their principal place of business, which is located in Rajasthan. The applicant has only one principal place of business, for which registration has been obtained and does not have any other fixed business, other than the principal place of business. This is admitted by the applicant.

The applicant filed an application seeking clarification on the issue, whether separate GST registration is required in Karnataka state.

The authority ruled that,”The applicant need not obtain a separate GST  registration in Karnataka, to execute the project in Karnataka. However, they are at liberty to obtain the said registration, if they are able & intend to have a fixed establishment at the project site in Karnataka. The dealer in Rajasthan has to charge CGST & SGST when the goods, purchased by the applicant, are shipped to a project site in Karnataka, under the “bill to ship” transaction in terms of Section 10(1)(b) of the IGST Act 2017.

The dealer in Karnataka has to charge IGST when the goods purchased by the applicant are shipped to a project site in Karnataka, under the bill to ship to the transaction,in terms of Section 10(1)(b) of the IGST Act 2017″.

The Authority of Advance Ruling (AAR) ruled that,”There is no need for a separate Goods and Service Tax (GST) registration in another state for execution of the contract in that state”.

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