Taxmann's GST on Works Contract & Other Construction/EPC Contracts

ABOUT THE AUTHORS Sudipta Bhattacharjee: Recognized in 2020 by the Businessworld Legal magazine amongst the top 40 of India’s finest lawyers and legal influencers under the age of 40 [#BWLegal40under40], Sudipta is a Partner at a reputed Tier-1 law firm’s Delhi-NCR office and has 17 years of experience in providing strategic tax and allied commerciallegal advisory services to clients in diverse sectors and in structuring, drafting, reviewing, and negotiation of various contracts. He is a lawyer by qualification, and has graduated from the prestigious National University of Juridical Sciences, Kolkata. Sudipta specializes in all pre-GST Indian indirect taxes including Customs, Excise, Service Tax as well as GST and contract documentation related services. He has been involved in providing strategic advice on the GST transition and implementation in India to businesses across sectors and has undertaken several training sessions educating clients and general public about the impact of GST on their key business processes. Sudipta has also led VAT impact assessments for business conglomerates in Kuwait relating to the proposed VAT introduction in middle-east (Gulf Co-operation Council countries).

Sudipta regularly speaks in various prestigious conferences and has written extensively on GST and other tax issues in newspapers like Business Standard, Economic Times and tax portals like VAT infoline and Taxsutra. Sudipta has been recognized as “Highly Regarded” in Indirect Tax by World Tax (The comprehensive guide to the world’s leading tax firms) since 2020 and has been repeatedly recognized as an ‘Indirect Tax Leader’ for India by the International Tax Review since 2017. He has also been ranked as a ‘Leading Lawyer’ for ‘Tax’ in Chambers & Partners and Legal 500 Asia-pacific (India) 2022 Edition as well as in the RSG India report on law firms, 2020.

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S R O H T U A E H T T U O B A

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Rishabh Prasad: Rishabh is an experienced tax lawyer working in the chambers of a highly reputed tax counsel and is based out of Delhi. He graduated from the prestigious National University of Juridical Sciences, Kolkata in 2015 and has worked extensively in all areas of indirect tax including GST, Service Tax, Customs, FTP and International Trade Laws.

Rishabh has also been deeply involved with the GST transition in India and has regularly been advising various corporate houses on strategic as well as typical day to day GST issues including transaction structuring. Further, Rishabh has been a part of various transnational assignments for business conglomerates in relation to the impending transition to VAT regime in the middle-east (Gulf Co-operation Council countries).

Abhishek Garg: Abhishek is a practicing lawyer and holds dual professional qualifications of a Chartered Accountant and an Advocate. He is a Commerce Graduate from the prestigious Shri Ram College of Commerce and has done his Law from Campus Law Center, Faculty of Law, Delhi. He is a Fellow Member of Institute of Chartered Accountants of India (ICAI). He has developed his niche in tax and corporate laws while working with top tier law firms of the country like Shardul Amarchand Mangaldas, Lakshmikumaran & Sridharan and Advaita Legal. He has experience of handling Direct and Indirect Tax Litigations and Company law matters across all judicial and quasi-judicial fora. He is actively involved in advising and training various companies, industries and professionals in relation to taxation, corporate and commercial laws.

Abhishek is also visiting faculty on Indirect Tax Laws and Insolvency and Bankruptcy laws at ICAI. He is also a regular speaker at various conferences and CA study circles across country. At present, he is practicing through his own founded law firm AGS Legal and is based out of Delhi.

PREFACE TO EIGHTH EDITION

.

When the first edition of this book was published in January 2018, little did we expect that we would be preparing the eighth edition within a span of four years.

We have been overwhelmed with the positive feedback and comments received from our readers - specifically, we are sincerely grateful for the following kind comments received over email from Mr. Arvind Datar (Senior Advocate): “Over the last few days, I was going through your book on Works Contract and I must compliment you and your co-authors in the excellent manner in which it has been written. It is really indispensable for all those practicing in GST. The Works Contract continues to be highly contentious and your book will be most useful to practitioners as well as assessees. I wish your book all success”.

It is humbling and inspires us to do our best to add as much value as possible in each new edition for you, the reader.

We sincerely hope that you would find this new edition as useful as you have found the previous ones. Please continue writing to us with your comments, suggestions and feedback m o c . l i a m g @ e e j r a h c a t t a h b . o t p i d u s : d i l i a m e

a i 2 d 2 n 0 I , 2 i h y l a e D M

SUDIPTA BHATTACHARJEE

u d e . s j u n @ d a s a r p h b a h s i r : d i l i a m e

RISHABH PRASAD

m o c . l a g e l s g a @ k e h s i h b a : d i l i a m e

ABHISHEK GARG

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ACKNOWLEDGEMENT

ed he t v fl o o d sn g na i s s r s e e l b b m ee hm t hy t l i i wm . eae l f n b r i o i s e t s s ohl e pti skm n a as wh i h ytt o r t h a e s t i n kl i el p mdm lo mu c ooc cwa ssm i r h o e t hh ft t o ug nan oei i p thl e Te l h p . y mt r o ohf cgs i eme hl n TA o

fi s o hs . ere no v of i l ,l oh a t s n eoo dhs i uGs t e i t f t i j a o u r r g Sp .i r rr i e e h hMt t , n sa i i s d e p r i nh pI s x r n ei o t ynn l o l e i a t ca m fix i ad c eTn pta t sc r eo or t ip p edu kns I i l f , e doc l s u n da on d we i gu se g r old hge t nu i u v n ai i t eln e hh o Tt c

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CONTENTS E G A P

About the Authors

I-5

Preface to Eighth Edition

I-7

Acknowledgement

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CHAPTER 1 INTRODUCTION TO THE SCHEME OF GST

1

CHAPTER 2 EVOLUTION OF ‘WORKS CONTRACT’ PRE-GST

8

CHAPTER 3 DEFINITION OF ‘WORKS CONTRACT’ UNDER GST

25

CHAPTER 4 CASE STUDIES: APPLYING THE UNDERSTANDING OF ‘WORKS CONTRACT’ 31 CHAPTER 5 ‘WORKS CONTRACT’ MUST PERTAIN TO ‘IMMOVABLE PROPERTY’ - WHAT IS ‘IMMOVABLE PROPERTY’?

34

CHAPTER 6 FOR A CONTRACT TO QUALIFY AS ‘WORKS CONTRACT’, IT MUST INVOLVE ‘TRANSFER OF PROPERTY IN GOODS’ - WHAT IS ‘TRANSFER OF PROPERTY IN GOODS’?

46 CHAPTER 7 ‘COMPOSITE’ AND ‘MIXED’ SUPPLY - RELEVANCE UNDER ‘WORKS CONTRACT’ 49

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S T N E T N O C

I-12 E G A P

CHAPTER 8 INTERPLAY BETWEEN COMPOSITE SUPPLY, MIXED SUPPLY AND WORKS CONTRACTS 65 CHAPTER 9 CLASSIFICATION OF SERVICES UNDER GST AND ‘WORKS CONTRACTS’

72

CHAPTER 10 INPUT TAX CREDIT FOR ‘WORKS CONTRACT’

77

CHAPTER 11 CASE STUDIES TO PRACTICALLY UNDERSTAND WHETHER A CONTRACT WOULD QUALIFY AS ‘WORKS CONTRACT’ 108 CHAPTER 12 COMPARISON WITH PRE-GST REGIME - WHAT CONSTITUTED ‘WORKS CONTRACT’ THEN, DO THEY STILL QUALIFY AS ‘WORKS CONTRACT’?

118 CHAPTER 13 REGISTRATION FOR WORKS CONTRACTOR UNDER GST

121

CHAPTER 14 TIME OF SUPPLY AND ISSUANCE OF INVOICE (POINT OF TAXATION) 127 CHAPTER 15 IMPACT OF GST ON ADVANCES/ SECURITY DEPOSITS ETC.

130

CHAPTER 16 VALUATION AND ‘FREE OF COST’ SUPPLIES BY THE CUSTOMER 136 CHAPTER 17 PLACE OF SUPPLY

142

S T N E T N O C

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E G A P

CHAPTER 18 LIQUIDATED DAMAGES UNDER WORKS CONTRACTS & GST IMPLICATIONS

146

CHAPTER 19 GST RATES AS APPLICABLE ON VARIOUS TYPES OF WORKS CONTRACTS

159

CHAPTER 20 SUMMARIZING THE KEY DIFFERENCES IN ‘WORKS CONTRACT’ IN THE PRE AND POST GST ERA 173 CHAPTER 21 TRANSITION PROVISIONS UNDER GST FOR WORKS CONTRACT 175 CHAPTER 22 TAX DEDUCTION AT SOURCE (“TDS”)

183

CHAPTER 23 WORKS CONTRACT AND IMPLICATIONS IN OIL & GAS SECTOR 193 CHAPTER 24 WORKS CONTRACT AND IMPLICATIONS IN REAL ESTATE

200

CHAPTER 25 WORKS CONTRACT AND IMPLICATIONS FOR ROADS/ HIGHWAYS 289 CHAPTER 26 WORKS CONTRACTS AND IMPLICATIONS ON PORTS

300

CHAPTER 27 WORKS CONTRACT AND IMPLICATIONS ON THERMAL POWER GENERATION 305

S T N E T N O C

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CHAPTER 28 WORKS CONTRACT AND IMPLICATIONS ON SOLAR POWER GENERATION 308 CHAPTER 29 WORKS CONTRACT AND IMPLICATIONS ON LARGE MANUFACTURING PLANTS

324

CHAPTER 30 WORKS CONTRACT AND IMPLICATIONS ON LARGE WATER SUPPLY PROJECTS 330 CHAPTER 31 GST AND ANTI-PROFITEERING

337

CHAPTER 32 PRACTICAL STRATEGIES VIS-A-VIS STRUCTURING OF VARIOUS TYPES OF WORKS CONTRACT UNDER GST 354 CHAPTER 33 WHAT HAPPENS TO ‘NO-INCOME TAX’ POSITION FOR OFFSHORE SUPPLIES UNDER A SINGLE EPC CONTRACT, POST GST? 365 CHAPTER 34 BEST PRACTICES FOR TAX CONTROVERSY MANAGEMENT UNDER GST 370

ANNEXURES u

ANNEXURE 1 - RELEVANT CGST RATE SCHEDULE FOR SERVICES 381

u

ANNEXURE 2 - MAHARASHTRA GST ACT - NEW COMPOSITION SCHEME FOR BUILDER AND DEVELOPER

400

ANNEXURE 3 - RELEVANT EXPLANATORY NOTES TO THE SCHEME OF CLASSIFICATION OF SERVICES

405

u

8

C H A P T E R

INTERPLAY BETWEEN COMPOSITE SUPPLY, MIXED SUPPLY AND WORKS CONTRACTS

s dk nr ao sw e ‘ l a p i o c nt i s r t . pn t c gua nor i t mn d i a o u c gt’ c ay er l ht p t np dou ecs s ad s e urx cei h s i m t d e ‘ eha vwr a o f ho ’ y l enp op wi u sts a r ne e i t t mi p s aro e ht p ce m sdo urc oo ‘ i fa v ss ee r i pir g oo el ’ ho t t dc a ror e ht dt n neo Umc

8.1 ‘WORKS CONTRACTS’ ARE ‘COMPOSITE SUPPLIES’

s a s t n e i d e r g n i e h t l l a e c n i s y l p p u s e t i s o p m o c a y l i r a s s e c e n: d se i i tf c s i at r a t s n oe cr sa ks rw oo l wl o Af ; s e c i v r e s d n a s d o o g f o y l p p u s e l b a x a t s e v l o v n i t c a r t n o c s k r o w A

ee t h i t s of po md n oi cm ‘ re oh f t to c t ae r t m n oo cc t aa h st i ’s t n c o ai r t t s n e ou cq st kx re on we ‘h t e, hs t e c ti a v hr t e ds ed hn sa i l s b d ao t s o e g sfi s i o s ty ’r i e eld cpa p nu e Os r

? y l p p u s l a p i c n i r p e h t e b d l u o w t a h W

. y tl c p Ap Tu Ss Ga s Ci el y hp t p ou t s dr ea du l nc ei pr t pa ap Ia I er l e u dh et he ch Sw s ee i hf t i c ne i p ss e i y l l l ea vc oi br ao. g e eec t ha i t v c r o e e t l s ru r e do wes shd nco aso sg ei hh f TTo

: t n a v e l e r e r a e l u d e h c S s i h t r e d n u s e i r t n e o w T

t a h t s” e — t a : t s h c i h w ) ( 5 y r t n E .

“The following shall be treated as supply

b of services, namely

i

? e c i v r e s r o s d o o g s a r e h t e h w t c a r t n o c s k r o w f o y t i l i b a x a T



-



f no ee ms r su e o i t c i v y i t r c a an fi d o . r r so e e h pnt yio t dh ne c el d a en e t r h uut obi f yw eln l ha o t r i ut ot c t n dau enj t yn a l l l o a e c r r ( e n sni e e d cg e i i v l ep r r e p a s u ) dn s ni d aen r se a dh s ots ode ge n i ens hi ou Tt b 



65

S T C A R T N O C S K R O W D N A Y L P P U S D E X I M

Para 8.2

66

b

— . n o i t a n a l 1 p x E

( ) “construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier” For the purposes of this clause—

i

( ) the expression “competent authority” means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:— i i

( ) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or i i i

( ) a chartered engineer registered with the Institution of Engineers (India); or

2

( ) a licensed surveyor of the respective local body of the city or town or village or development or planning authority;

ii

y l p p u s e t i s o p m o C 6 y r t n E .

( ) the expression “construction” includes additions, alterations, replacements or remodelling of any existing civil structure

a

The following composite supplies shall be treated as a supply of services, namely:— ( ) works contract as defined in clause (119) of section 2.

’ a oe e t h t , t gt i s nf s“r o ,oi oo ps s l wI ) d m e r I b t ( o ) e coal 61 ‘ ( u fwdd d7 n o ea n e h an nt h tc o oh i h 5t i t gS t sc a ii e e f s nwr i s o i r t mge6* . m v n rno yn eo e i t r r t w -f g r t ea nn o er dt i r Ed t s e e f oy tk a hw t c brau o s h yp nI ,dt l r i a a t I a d s mw t tns es r e l eb oa e et u nr dbno ad pe h tot nh i chact ac csoh fi hSitg h w o du n e tw 8i o i t n6 ss b c oy uu aA i eh r t sT“c bt t i en d eSos E nn a r Gts . c e a gi s hCn ti e hc t i t is en cA l i ,h p i y a t a l ep hT d t w fr u r S eo e s e y t G t Iph’ t i i d I C l i metwe b e dlc x a h auA i r ,dT m et n weS ‘ l d h G n oc u NSC a v

Therefore, a ‘Works Contract’ shall always be treated as a supply of service falling under entry 5(b) or entry 6, irrespective of whether the ‘principal supply’ therein is goods or services. d activities to be treated as supply of goods or supply of

services”

The

following composite supplies….”

ultra

vires

fe o r i t nn oe i t e c uh rt t e s nr oe ch tw a t hp t e c sx e de i , v r oe ry pu tb c Aa o Tt Se Ga l Cs er o hf t od t e d In I e et l n u i d, eg hn i cd Sl i fu o b ), x (e 5 l p em s uo ac l C a

8.2 ANALYSIS OF ENTRY 5(b) VERSUS ENTRY 6 b

, a v e d h c a S h s i n a M y b e l c i t r a e h t o t n i a g a e d a m e b n a c d r a g e r s i h t n i e c n e r e f e R *

Supra

6 Y R T N E S U S R E V ) ( 5 Y R T N E F O S I S Y L A N A

l el ba h ds l s u t oa l wf ,n e o t i a t cc i u f i r t t r s e n co nc r oe i t d e l n p u ms , od cr fo o w er ce nh at uo n sI s i . ’ re e c t i f v a r e . ds y ef r vo t i n e y E l cp ep s r i uh ss i ‘t nay osb i ad t e a dr r ee e i v di fo i s s c s na e ol b cc

’se e s caa h i v ’e t r r c e o af s trn t c n i ao a r g ca t n se ok cr c son k o rw o‘w m o wr l ‘e e et b he d t he tT t a p h.r ’ t e e si cc e x ve dr i es v osi rfd pon Iya I l ) p ep 9 l 1 u u( 1 ds 2 e‘ han cso Sa i t fdc o e e i )f S r (ie s 6 s d a el n s ucu e ab : de l ec C ,onn s i y l e f l a e r r e a ddf l l i ne u er mo ef iw S bo

’ e h t t i n i h t i w s e d u l c n i y l l a c i f i c . et y pr se ’p t c o ar r p t n e l ob ca s kv ro om wm ‘i mf ro e n t o i et hc t u r ft o s nn o oc i t i f n o i f y e t dv i i et hc Ta fe o c. i sv t e c r i e A t i s v T i fS t o c ayG l C ep hp e t h ut ts a o hat t I dsI eae l ddu ued i l f c i e s ns h oa c cl S ecf beo nb) an( ca6 tcy i r y ,t t s n r ne e op i r s oe i rd v opn reu pl ebr vao ov) bo( am5 emy hi r t t f n fo e o r sne i o s i d t a n bcu u er r ht e s t h n no t i Oc e

tel f ma he rht s e t , t m dsi t el a h ho l t hf r o f n o f o ot t i n,t o 8 c o0 i un t 7r d i t n n Cs i a f n C . e ’ ort dSc e c 1r -sa e) r h4 eat t dhn d1 co e0nrc u u 2 t ( e fps r o k er p eh r l to e a rw t s o‘ n f f i o )t t os r st t ( u n n a o o u l C i f o t c dm e a i m s a a efnss r aec t por ha uett r Sse t a g t nn a ect i o hes t t hecc u ftl h rc o nat i e s u h’ r ns ct , ncfoe o a c er r bt e s o i s f rna r e o e e r gccp e r sno h a i kn lt l e ere vd o hw ven T‘ eda

,rede 6 l oh ec 1f i t i l 0s t e fr 2w r o A ,a)s. t l ae c s Ae( )wa k Adc ta9 n n 2 em( a o6 mt s 6d dd 3o ne eo( er l G c mei wtf Ao r o e npAs omea i h et t h u enc t r r i iu t a s sp st nt n on er o Ce e m h e tmdl t s a n 1 n rnsi e 0e nr t 1v mo u eoaxo hGya C t ent t ase ta a t eem hS dde t air v d enmop t u r atp : o Ss neo a r nhes t h c on i t d t esh a y a tCh wbe n r ee, y) n T l h i nt ov Si i ( ,Gt t ) y r uaA e e t h9 i pbgt e n 2 r sn( i se y no6 i hv op6 twl eC u3 I

Larsen & Toubro supra)

b

a

b

x e l p m o c f o n o i t c u r t s n o c s e c i v r e s . fn o o si s h a s l a c f er t a a l r i a m pi es s aa n ,i s wd ae l n xf i ae t ed cs i a v w r e s s e rc e i dr v ne Us

i.e.

. tf’ ner e i h oc dtu i e,onv T o C vS r i l t e e o c s vGmu t t ns c era i t norst r p p n on uo n i t o eScc c avens l e s o b k nd’ r n y ae o t r goi t w v n H ea i ‘ t t e a c h a h a s t c t s a n e ufef y o h ls a t i n, l en a r ioe i cu fas o minq y eecel e r r dhd u) e dt t ndn a e o b ni nau s ec o i do i he t nd t n un tde a T ou m r h& d g t e l tLr u eo c o hh a f t f a s e( dy e l heh t o t s r t h gay e ncb p o i o d t r r n e e dt ep w i u i e c onl s i nedt b ovdn a coi v oo ,ba c s uallm l w e hh i m aw Tt l i

. et l c u dA eT hS cG SC fe o h et cf no e) t s i ( x 7 en ro ot i f c ne oS sr a e ed r en hu t d de ng aa t s s i r v e n de ns ui I oI t e ll a u cd i t e i h r c c sS i . t tc i , A e r T uS t c G nC ue j h st i h o t t tI AI

d

Para 8.2 b

67

a

‘(119) “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract

Larsen & Toubro

b

“a tax on the transfer of property in goods (whether as goods or in some other form) invoked in the execution of a works contract”

i.e.

In other words, the mere fact that ‘construction of complex’ is mentioned separately does not mean that ‘construction of complex’ would not qualify as a ‘works contract’ as defined under Goods and Service Tax.

S T C A R T N O C S K R O W D N A Y L P P U S D E X I M

.e , n, )ni gw c a oan i ( i iav tt l si k r r x ni n e a e aS of c e . i ” esptr t e s c e c e edt i y d e a s v l r he n l r b t a e u uomus trd St u p e .sn eeu T d s Snecns o n y i u Gs i ot l l e ru e d lacpi c e dcf i cu ’ nni s n G uic e o tdecc n p n i n ’i o v e easr t ca vsoe i s t ec sv l c a ee fru l pIoed b I S ase ydE xal l e e p asu r h t udpa t eo eu f hi c hsl r t c‘eo a sv SrD. 4 i h ,o‘1 r e e ’ cn e s ha i i n d t r h l t nooa wu p ’oaoto r g m y o l t 7 f s r p o t s a pnl e e l oi ui y cl l s m cu t p ‘c ip u se s sb e nSauah s t i n‘ f fI si f o e sif , I .

2 a d)’ I e1 eh 7cy l l s ( 0 p e ut2 ndp i t on drn ui i eei v t aS i hpx c ‘c t )f eb csa S( oaSAT

h’ytn csrhi o e t g i i l t i n h t c wpep u r uee r ’ h t t s‘ sT s a e n i ln wo . i ’ p a s ,c pt de t ur va oi seo ‘ s c h ut sgl re e f d c i o hf n x i t a e y r e t l a gl s y p r oc ple l t a duu d sn st n t ‘ ae u uu pTb o m tSo t i t y -Gtol . f ’ t s n s n eor e i e s c o oyhsj i pvtun v h e o rl r t oe u ne cs p i r f d a a e t ao r Ie m e I y rl a cee p s dl p s ee nubu d o i ht ae s t ‘ t i’ s sushea r c e g e a i c S vb y i y r f v f e i m e r o l h s a ae t u oos)( f q st sl 6 l o d t a l n el ye i yr Il w I t ep ms n vpe ea tc t l u r u h s a ‘rar dd eopt el b)mn hu coo(oo Sc t5cc a

b

dexseg l t aaa n eb t i r t l t af e n a s vso e e e i ov r se ld cde a t fe tf eaa n r s ire r d a i fm ’I teeo s h g t b . t t c e r ae eyxs e t r cat t t p n n n m n a i e o s oh u ec cc yc q l i c nte e x vis oe t f r i i a b e t c ni c u s r e uep ps fs rh oo a t tr s een nnpu hi oipl Tn daa c o ‘e .p svs f se o s ceru e h i tuv t t d a cr p e hi s egat t n h a gdsn i cr sni ni o i o g b d i m d n t a unc i r l . l d aue e s c e t e r nst ec e eb i wsdc n , s c n a oa ru e l su c oos l c T f i n v S y eac m r d f h G i i e l st f s u i rsi s n c n fe oe a ai o dl p nnchyws ouscdsr e n r i uo t ye o t a l t i dms e t ct c aelc i e l f e a h a i s i r r t s s w a h s t n d a t p a a i ner l eha w C s t wt

r ereeyeene hohhnh o m t p i t t t ate t c rrc fa spo s ne o ri m pua l f r u ntei e o t c onrpcsSs e r o . p i i n I e h e c t v e u I or c hyh ewst e utce uh l , o rt b frsu n xs t del s oloetd d c a nelai e ah otp tunnr cnmncdout c i u i o f i s nS r o o i i v ep o t of c ct i hp s c e d co e t l unn l da a s) roi hai t c Isk( cst s I h e r a i r n ne t h he Tho6 i e w dodw tws y , & n nicn s t L u s na f o un e a a i o op l r l left o c y i C ymeyt m f ai t t os s i ohv h lt r et i se na e cti i raaui tt p oefccgrrqw t e a e rhoaj ld hti pT l o a e n e n . t r s e e wr h a o ec p gt a i t ha t ns st ehi t lcgh c nrc fp u y i nt r l o ri eeA y e u p h t hu mg rks T ppt e r b a n S u A o d oo nt of n.teG wocr s ) h v C ot etat i i s t e l e e n i c hpAl ex h u e a t . s he t e pf s e l s t ltd a m d o spu i o o i i e att s r) ymoesnnsp 9 o e s nc gbeid 1 uo1 al nrhdi ct e t i ( s pa s s2 iyorrei t mt e r t o r d c i n t r f ( ona n f a n o e s t cd u i crd eor t t u e ei c osl n te s r ol he a ooaa oc Tr S ghsCf f

tayTr a l o hoeSf t t G t a t er sl n ea e a h a i p f v t s i er e r rs el a o l ode f c s r tdlnl y u a e c ten AdI o c Tn.i e e v s t Sn cr i i e Gi I v s I C ra g e e ns ei l su hd f t load i d fu e y o eh l t c Ibpa I r p eS ur eos l t x ta u eaeh dl sbt ep h aod cmdtn Soeoa c t s t ta l a s a a e r hgr se t ti d n tn ec ei r d ba u e ul lro hc l t a nn hnt o s oi t cn i e y t st l a ct n i kr ev r ro mrao p e p osrwm t o a n i to y ts n i l a i t l ec ht o nu htI i t r d. w r t ee e s i r pn f m e ii r soya g i c ul e tab cr I

a

68 Para 8.3

“To remove some ambiguities certain activities have been specifically defined by description as services and are referred as Declared Services vis-a-vis

8.3 CASE STUDY VI

A company is in the process of constructing a residential complex with the intention to sell and transfer the units and car parking therein to purchaser together with rights to use and occupy the common areas and facilities. For the purposes of constructing such residential complex, the Company engages the construction services of a contractor and also procures manpower and intermediary services of real-estate brokers.

supra

T S G R E D N U D E C N U O N O R P G N I L U R E C N A V D A

fo f so a hyn t ti o I l i i t .b i s n ai dl f oi oae gvd fae e o h ht yt , l gt p pnc uiA snT i rmS. t o G r n ee a C t ce v i e d e v hl r t r e e o r f s Fo y f. l o t7n i 1o yd l eds p r i n pc ) uxa9 sa 1 61 at1( ts2 su i nn p oo yn i l i it p t pfcc uoee tSS sn rr ae e e r dd m e nn lu hi a u t e v tt hai c a w dr e n r t goc n t nc xo i aa d c upts l mtk c u r nip o oon w cni

t. xgyu ennp ) s l i a t p y na pi l mp l f opmen cuoko lscat i t a oenc i h t s u t l ar n eafct di soys i n s s n r o e e a o c r cp t i fc r v me o ar od r ec nt s n on i odeu t crhf c u ato rsw,e s a t t l e s a c nsui s oeov c f ci e r o v e hs rr t t oe n t f e s e c t rtca x n oc r e i t aS t c n r e at .oh s r n t c t e oc n o t ocik( csvrs o r k e w yr e s c bo fv i ho dwc r efu ee do srs i u v h eht or tac i ru u pt wns sa ef g n h e o centt o i i nd v hl i a t r e e or nss s c eidlx o a e hr osa Ta gi t cdk unn raa t eB s nd ni l ol r cno oW i s s r i e md sn nu as yr l i ts p pda ueb sty a ei e c ho k t n s fs r o a u t e l h r t a ui t t wo a ngt nn eo o hl t ak r sno i ow ti a t ha y t a Ws b b r ue sd ge ne i f l ? o dg oe n pt i ac fi o n c oa ns n os i i aF t

,esrt .fT s eecoS hv e d ctl A y G i n l ,o v t Tp u v o r n S p t n e e s u G i s l e l s l C fmta b e f e n o eh a e edh i r yg l tts mn l r p f a e oi o pae d s s ui r gfn i sh g s n2a dtaai4t nr Bn5c aee a9a e h y 9 emp r sdTk t dn n n euo ou-r hoc ,yu oy r t lTn gl Gs p g i fn p h k rr o n u i e t o d soi yr dw l p oenwnf ” u o pcti s t o c uci t 3 sAoaa2 e t r p r 4u s t hd .m 5t n t b o eou o9a l bd c C9n snaSsee e u gkbh vb gnr t d l o i n l o l n yd i o Wu vl i o o l “ na i e i Pa v wc i kro rurffev otpoodr a e wn nnos o s . o C i e i i e t eet t t i t a N hrn c i n r s i u S Taa f o re % hi ct Hp 8 cl d s i em1 p neh h poh ot wa ctTca

f atrtyo c a l o wh t e f h e j et yo t ga Rne l ri hovPrr i l s i t t r s a i i a . a u ws n s w l o l o e o spc i c s S x s a i i s v waeyhe r g T e nn b c te c .ns kide aa o e r r belco b t t p f n eoadt c l i odre i o a uv cat l s n shc ep d ’ Su t dpen n r aha t g t aMs e ts cUa nb a i i l R d r e ho dt p f bl p-n o a)isugg o ” n nih eS i f o d t hMi s o h n t t y g tUaa%i l a u 5 l p R k h h“ c p fg t (aro a u is vp ede r ehr e t e yo fra t a hi o b f r l emto y r R i e t s l a L o h n A nrpatA o , s r a ol r i e e o t e l o k f h b p tS r, t n a o r l c eaoe yi e ngww l vbp i eeo t edp r h M D e p e a t t pae r c s k r cl a ei st rj i no li a % e5 tU ssPr I

Held:

ee at h sa t i rf ea r po e eg hs n t i d tha c a i e hh r t t gwn nri o i o f d j t nn n ae o t c s me r e ph i du t nq m ue o sfr ’ o t F n . anc t coe i i t l a r p t r pr o ao c pn es i hn s t i ta, r a d t hr e t v oi f dt e l c e ce ar hr s Rti n Ao n Ac o i eea t hnr Toe l a -d d i s nn ao t c s

Held

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Questions Raised

R A A 3 1 1 L I V 8 1 0 2 -

ts smnn rk d e ooao i drr t co s i nof g uwsela p u d pt rfoqa ooo o e e t g p c hen h f aoo s T t i r c . t t yn Sng n o.onba i s i t dc ce n a i ct l ei oep v r i v vr i os s p i e t p a e c i c sm ee esn r h pda mst snr en oa t o ge rs , cr s pd h d a d aoon hw ooa sg y g cl a l ffnna wo o o o i i i t c tyyt a l e n l c p t p app e r s cpu r oe i usep l , p s s T d prdn nS n a ao . ) efaarGA hstytrT n k r l e Tr eb e dG hn ( :ommt we y eeuc rs tu shxn n ecawae r o -tg d o e rn a st f p a f t e a i r d l d o erwb p gdo das i nude l n i l se ni k c a ea rr ai nv rat t

(ii) Dinesh Kumar Agrawal

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vis a vis

Questions Raised:

Para 8.4 69

8.4 KEY ADVANCE RULING PRONOUNCED UNDER GST AS RELEVANT FOR THIS CHAPTER (i) Vihan Enterprises - 2018-VIL-116-AAR

S T C A R T N O C S K R O W D N A Y L P P U S D E X I M

tdens a t k o n i ha r i s t t o oa w Rtpt Anmr a e o A ops m sa . eecn t r Tc aa hu t rSA ycdt boeeGT t r o S h u t dpt t G i, e,t eC yl dg s b l nn ui g ae l roni h c lt e c i ne ef d s on b r o uo ci ) yghco9 t t n c l o1 e edAs f 1 a rn.l( s oata2 c en ar eftr btn o ai t c an t tc dal l rpone u t cas r one scf i cow l k c r o p t i o p o s e tl p an w n o egr ei n f h s miaot l i s v eyo e or easu br r satdp g aafaer ve ewoni p htnee c h t c ot s at i ea fr r o n c t t sc snuie a y r e o gr l t s cs p r t ue npa n ah ouho l c tcscc

. fg8 se9o nyessge i ehimnct h0 n1 dktmei ri 0ti0 n 2 s n eny t uve a2 / r gr mst i y e 6eer auboyn f m s s s / m gtdc e a i t 3r n)e ev t u e ePddr Pa1a E i s n h . pt yEvnua so a t t e J nMoac wMc N n D r n e i a(p h n h outej r pg , t d o t oe si 5 ttni i2 mn s r i a c v e a t w a i c l oit n opa lr i d i cbv r g s a c l a f e p pni t ut n n f nmi s i i t i p i t a u s t ol o n a c a l d i t uoFt aia t P s f , , ceroNo c y 8 i h a h e u Pl r 1 Td n r0 rdEpt y i n d f t l c p r i i M d a . n s 2 t a ues u I e nl s s / l t i e e bsb oa c e1 n ,d ii hg e/er ci h. cT n jrhcMto n ar o e i . t arpTs gN r g e sc . n i n dyi enegpot b l c e l i tE o l e eg yt r i n nna o i 7 v j i n a eit j o a c e 1 i , g e h n cl r s r c dp n n i a g i e u0ef l i i ef cg p a o2yt i i g , pn n,em n hh bo r aa mhi eni e c g e t N s r l r eh ifoi s e , ) cwubah hc&e g e Tegd t nftoaMt h d M a i ne o n r sR b i e h e r o t l d e t fc i ( m f b a 0 gma o uu f al x 3fa n a e r f c st l d e a f s dAT ro r nnpr e i o e l c n notfegf t a i a o c f i a n o d r m s t tagi naido t uc n iFn cnwann be e i i a l j i n a o NoC p f o er re t oon Icf pi od hp as t tif -Eo Questions raised:

: d e s i a r s a w n o i t s e u q g n i w o l l o f e h t d n u o r g k c a b s i h t n I

)et ? s tc ki rsA o op T Wm S goG ncC i ff b o mo) un9 o l 1 i P 1 t i ( &n2 i f n le o a i cdt i c ee r hs t c t e r n l e i E d h n t ,i l u a cwd i s e n l n al i haf cfe t en d Ma s a (c i t lc sp e a i p t r i At v n i eo t c h c at s k Pyr Ebo nw Me f rko a e t hr y l t ep e d p hn u Wu s

: s w o l l o f s a d l e h a r t h s a r a h a M , s g n i l u R e c n a v d A r o f y t i r o h t u A e h T

e eher poa hi ci t m ,hpm t wI d n n a Gsa t e / cn vl i e l a l a p p o ci i pi v r e alpnt p i epes a hamr m t ue, f fo s Hbe o eCmc tn ar c aoChu r Rco e t s fe n hfo oto r ce nf g dkn oo i ei lit e y s cr ta oc u ut l pa ra kt or rs rt n one pn eowoh hc,ct t egdn n fh ni i o t as r e yte i l naeep n h n i i t l i t p r u g u rdnes t c ee a s v, e wb l drn e es g a m l i i x bs ra a eo od t t e t dy so. s t i y e rwr ar ote rodf u h nn e l . t i t ah c c f u t hc ne Aai t

Held:

70 Para 8.4

(iii) EIFFEL Hills and Dales Developers Private Limited 2018-VIL-317-AAR

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tT eec l gaS d ar G nk tC uc n ba oe h hpct ca f g u n o ssi a ) b0 fd o 3 m( seu2 d r l i n e p v vo o i e i r t e hc cpt e ee, s r er ebre cood f i t v e n kr r u r e oed s h e fwTn o .f i gs rn e e isd e bb ns mmi a s uuu y l nlbp epfp gto u c r e s e a ps e l t xr te i us a hyoo t lcp t ds m eoyo r vma c r n a e i s s d e e bc t ru oi ot i ov t e r se hs l . s t nc t a fnoA to I ic

e c n i s t a h t d l e h o s l a s a w t i g n i d n i f s i h t o t y r a l l o r o c a s A

eCc t Vu e l r Pt p s mUn o/o csc e pg ri op n i f d seu i mc l run e i dH. r c oCe t kCe r n oRl i fe wo g e a hgn t n i i a ,y t r ad c al, r ,s t k e n rn oo i l cw d rn f e o gta a nw ; ei s r pb e ommb cu rm s o l t a ep s h hlr t c aof rnfo e rs pe e n t po sx i i a ep t ) (

a

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T S G R E D N U D E C N U O N O R P G N I L U R E C N A V D A

e s a c . eh t hr t a se a e rh ot o ht t r d a e eh c oa t t dt ea hs ci ah t c t i a h rw e hg t n i i e d l si i u mb o et t s d y e s n ge t ns i a b f m, e ub l p y ea hm t ) (

f o y l p p u s . ec t t i A s o pT mS oG cC e ah st i f ko r) o9 1 w1 ( g2 nn i b o mi t c ue l s p n ri od f e tn c i af r e t d n os ca t ec ha t r t ,n e o r oc f s e k r r e ho Tw

, t tda n nh eiw mw, fs to i e f , y n t f o n I i et ? ’ mct c eua r r t r us t cnn ooo rcc pr s ,o k n fr gt o i s n w e a‘ dc s ia fl o p y spf i a e l cea i u v h q t r e d ol s t u er o ho t tw? rc e e a t hrma e t t r t n e s e hoy l b Wcsa r a :y oi c t l bc p ep dj a ee r de e h dnt nae elb e r nl .n l c i t uw e t ,tdeed y aehsn t hc toa r t e uoph r pdd t uc ol r reed a phrepe l r ee a rh ee s i l d e c t b h r n r t ar re e n vu or mi f of g d m mR en e l iog m b e a i iAg bcg A i y nel en n er ah e eas e hTr wra t i . o ’esf w ws e ewc t dn nctv i ea oin v i c arsi r t ceul e c s i p esl ep db ntp i a ncpa oe oaas r t ct h eet n h ht no ot t i nt gcos a nstaeh. t k i hr s n e d e r e boecwet i u r v we i s‘ i mdg v e d i n s t ca sa tc na i n e v a at r ’c yr t n e f i sinl n s l e eie % p eac2 mpm hui1 v a n p Tqr fr o deo :l eee l us vhv t e o e t oh ye a Gb wt d r ‘ Held

Para 8.4 71

b

(iv) Vikram Sarabhai Space Centre 2019-VIL-141-AAR Questions raised

GST on Works Contract & Other Construction/EPC Contracts AUTHOR :

PUBLISHER : DATE OF PUBLICATION : EDITION : ISBN NO : NO. OF PAGES : BINDING TYPE :

SUDIPTA BHATTACHARJEE, RISHABH PRASAD, ABHISHEK GARG TAXMANN MAY 2022 8TH EDITION 9789356221444 432 PAPERBACK

Rs. : 995 | USD : 45

Description This book covers a broad spectrum of aspects in the context of works contracts. It provides an understanding of the impact of GST as applicable to ‘works contracts’ vis-à-vis a wide range of construction and EPC/O&M contracts or concession agreements.

This book serves as a comprehensive and practical guide for tax specialists and generalist legal advisors.

The Present Publication is the 8 th Edition, authored by Sudipta Bhattacharjee, Rishab Prasad & Abhishek Garg. This book is amended by the Finance Act 2022 and amended up to 25th April 2022. The key features of this book are as follows: u

[34 Crisp, Easily Readable Chapters] each explaining the concepts with several casestudies

u

[Evolution of Concepts from the Pre-GST Era] have also been touched upon in the book to provide a comprehensive understanding

u

[Sector-wise Coverage] which includes the following:

u

u

n

Oil & Gas Sector

n

Real Estate Sector

n

Road/Highway Projects

n

Ports

n

Thermal and Solar Power Generation

n

Large Manufacturing Plants

n

Large Urban Water Supply Projects

[Analysis of Hot-button Issues] such as: n

What can qualify as immovable property?

n

Input Tax Credit related aspects as applicable to ‘works contracts’

n

Impact on Advances/Security Deposits

n

‘Free of Cost’ Supplies

n

Transitional Issues

n

Anti-profiteering

[Detailed Analysis] on the following topics: n

Analysis on the applicability of GST on liquidated damages with detailed reference to the updated legal position in the European Union/United Kingdom

n

Practical Strategies vis-à-vis structuring various types of construction/EPC contracts

n

Best practices for tax controversy management under GST

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