The Telangana Authority for Advance Ruling (AAR), ruled that the place of supply of services provided by a sub-contractor is the location of the contractor in the case of construction of immovable property outside India and comes under the purview of the Goods and Services Tax (GST) Regime.
M/s. Sri Avantika Contractors Limited, the applicant is engaged in construction services providing works contract services. They have secured contract from National Buildings Construction Corporation Limited (NBCCL) Delhi for constructing a building at Maldives.
It is the understanding of the applicant that recipient of construction service is the Government of Maldives as the institute is being constructed as part of assistance from Government of India to Government of Maldives. Further as per the GST Act, 2017, the supply of services is taxable only within the territory of India and therefore the supply of this service outside India does not constitute taxable supply.
The applicant has sought advance ruling on three issues
1. Whether the construction of Institute of Security and Law Enforcement Studies at Addu City in Maldives, constructed for Government of Maldives under a Memorandum of Understanding (MOU) between India and Maldives falls within the GST net?
2. Who is the recipient of service in the instant case?
3. What is the place of supply in respect of the works contract for setting up of setting up of the Institute of Security and Law Enforcement Studies at Addu City in Maldives?
It was contended by the applicant that though the contract has been awarded by M/s. National Building Construction Company Limited (NBCC), as per the MOU, the Institute is being constructed on behalf of Government of India as a part of assistance by the Government of India to Government of Maldives towards Social and economic development of Maldives. Therefore, the recipient of service in this case is Government of Maldives. Though the Contract is awarded by NBCC, they are the executing body, sub – contracted the subject work to the applicant.
The Two-Member Bench of the Authority comprising S.V. Kasi Visweshwar Rao, Additional Commissioner Sales Tax and B. Raghu Kiran, Joint Commissioner, Central Tax observed that “The proviso to Sub-Section (3) of Section 12 of IGST Act clearly mention that if the location of immovable property is intended to be located outside India, the place of supply shall be the location of the recipient. Therefore, the supply by the applicant to the NBCCL is within the ambit of GST.”
The Bench further noted that National Buildings Construction Corporation Limited is recipient of service from the applicant.
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