WORKS CONTRACT DEFINITION :
‘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.”
PRE GST V/S POST GST :
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EXAMPLE RELATED TO REPAIRING OF CAR :
1. What is rate of GST 28% or 18% ???
2. This is a composite supply or mixed supply ???
Ans . This is a example of composite Supply and here GST rate chargeable is 18%.
IMPORTANT POINTS
- We will continue the example of car repairing :
√ Can we bifurcate this into two separate invoices and charge different rate of GST in both of the invoices
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√ If bifurcation is allowed then it will create legal dispute , then what is object of composite supply
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- For more details refer circular 47 dated 18 June 2018
CIRCULAR NO. 47 DATED 18 JUNE 2018
- Bifurcation possible
- Now,we will discuss that can bifurcation is possible in case of works contract
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NO
As per para 6(A) of Schedule – II of CGST Act :
works contract is determine as supply of service only.
PARA 6(A) OF SCHEDULE – II OF CGST ACT 2017
- Deemed to be Supply of
- Example:
Note : In the above example the contract is concluded as Supply of service.
IN CASE OF SOLAR POWER PENAL
- Let’stake an example :
Mr. Mohit has purchased solar power penal along with erection and commissioning also supplier has indeeded with earth
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BECOME A IMMOVABLE PROPERTY
Question : This is a supply of goods or works contract ???
LET’S START THE ANALYSIS :
31ST GST COUNCIL MEETING DATED 2ND DEC.2018
- In this meeting has introduced a deeming Provision Related to Solar Power Penal which will be applicable from 1st Jan. 2019 :
IMPORTANT EXAMPLE :
INPUT TAX CREDIT AND VALUATION IN CASE OF WORKS CONTRACT :
- Section17(5) clause C : Works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract
- Here“plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but
excludes—
(i) land,building or any other civil structures
(ii) telecommunication towers
(iii) pipelines laid outside the factory premises
LET’S TAKE AN EXAMPLE :
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Section 17 (5) clause d : Goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
Example :
If cement, iron and steel is purchased by shyam then can shyam claim ITC on those products ??
NO
LET’S TAKE ANOTHER EXAMPLE :
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