The combination of words “Works contract” itself states that it is a contract for doing the agreed work. Works Contract may be done for immovable property as well as for movable property. Basically works contract is a combination of supply of goods and supply of services. Pre-GST, tax was levied under the provisions of Service Tax on service part as well as levied under the provisions of VAT Laws on goods part transferred through Works Contract. A person had to pay both taxes i.e. service tax and VAT on a single transaction of works contract. The Service Tax Law was introduced in the year 1994. Prior to introduction of service tax law the tax was levied only on sale of goods.
The dispute whether works contract is supply of goods or supply of service, reached before the Hon’ble Supreme Court. The Hon’ble Supreme Court held in the case of Gannon Dunkerly that Works Contract was a supply of service. The Court held that in case of a works contract, the dominant intention of the contract is the execution of works, which is a service and there is no element of sale of goods (as per Sale of Goods Act). The contract being one indivisible contract, it cannot be broken up to levy VAT on sale of goods involved in the execution of works contract. This decision led the Government to amend the Constitution of India and insert Article 366(29A) (b) which enabled the State Governments to levy tax (VAT) on transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract.
Prior to GST Works Contract was applicable for both contract i.e contract for movable property and contract for immovable property.
Under GST regime it is applicable only to contract for immovable property.
This article contains following concepts in regard of Works Contract under GST- What is Works Contract, What is immovable Property for the purpose of Works Contract, Whether Works Contract Supply is a Supply of Service or Supply of Goods or both, Input Tax Credit provisions for Works Contract, Notification for rate of tax in relation to Works Contract, Definition of Original Work, Place of Supply in case of Works Contract under GST, Additional requirement of maintenance of accounts by the Works Contractor under GST,GST Registration clarification if work is done in other State and Advance Ruling on rate of tax specified under s.no.3 (v) of the Notification No.11/2017 – Central Tax (Rate).
Page Contents
- Q 1. What is Works Contract ?
- Q 2. What is immovable Property for the purpose of Works Contract ?
- Q 3. Whether Works Contract is Supply of Service or Supply of Goods or both ?
- Q 4. Input Tax Credit provisions for Works Contract ?
- Q 5. Notification for rate of tax in relation to Works Contract.
- 6. Definition of Original Work.
- 7. Place of Supply in case of Works Contract under GST.
- 8. Additional requirement of maintenance of accounts by the Works Contractor under GST.
- 9. GST Registration clarification if work is done in other State.
- 10. Advance Ruling on rate of tax specified under s.no.3 (v) of the Notification No.11/2017 – Central Tax (Rate).
Q 1. What is Works Contract ?
Ans: Works Contract is defined under section 2 (119) of the CGST Act as “”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;”
Thus Works Contract is applicable to fourteen types of contract to be executed for immovable property. Such contracts are building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning.
Other mandatory condition for Works Contract under GST is that transfer of property in goods must be there. If there is a contract of pure service contract without transferring any type of goods then that contract shall not be treated as Works Contract under GST. For example a person provides pure labour service to construct building without any transfer of goods then this contract shall not be treated as Works Contract.
Under GST regime Works Contract done for movable property shall not be treated as Works Contract.
Q 2. What is immovable Property for the purpose of Works Contract ?
Ans: The immovable property has not been defined under the GST Law. The definition of immovable property under section 3 (26) of the General Clause Act, 1897 is reproduced as – ““immovable property” shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.”
According to the section 2 (6) of the Registration Act, 1908 immovable property means –
““Immovable Property” includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass;”
According to interpretation clause under section 3 of the Transfer of Property Act “immoveable property” does not include standing timber, growing crops or grass;”
Under the interpretation clause it is also interpreted for “attached to the earth” “attached to the earth” means—
(a) rooted in the earth, as in the case of trees and shrubs;
(b) imbedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached;
On perusal of the definitions given for immovable property it has been noticed that prime property under the term of “immovable property” is land or earth. Further permanently fastened or attached to land or benefits to arise out of land are also treated as immovable properties.
A work shall be treated as Works Contract if that work is done for land or earth or for immovable property. Immovable property cannot be moved. It cannot be separated from the land or earth. If it is detached it shall have to destroy. For example a building or bridge cannot be detached from the earth. Platform, constructed to fix plant and machinery, cannot be detached from the land. If the platform is detached that shall have to destroy.
The Authority in advance ruling M/S ABB India Ltd; AAR-West Bengal observed about immovable property is as under:
Para 4.4 – “The essential character of immovable property is that it is attached to the earth, or permanently fastened to anything attached to the earth, or forming pan of the land and not agreed to be severed before supply or under a contract of supply.”
Para 4.5 – “In S/S Triveni N L Ltd [RN – 910, 911 & 912 of 2001 (All)] Allahabad High Court observes that permanently fastened to anything attached to the earth has to be read in the context for the reason that nothing can be fastened to the earth permanently so that it can never be removed. If the article cannot be used without fastening or attaching it to the earth and is not removed under ordinary circumstances, it may be considered permanently fastened to anything attached to the earth.
Furthermore, in the context of the GST Act, if the article attached to the earth is not agreed to be severed before supply or under a contract for supply, it ceases to be goods and, for that matter, a moveable property.”
Q 3. Whether Works Contract is Supply of Service or Supply of Goods or both ?
Ans: Prior to GST both provisions relating to services and sale of goods were separately treated. Both taxes i.e Service Tax and Vat were levied on a single transaction of Works Contract. Under the GST regime the Legislature has provided provisions of Composite Supply and Mixed Supply.
Composite Supply means a combination of different supplies which is naturally bundled and cannot be segregated from each other. One of which is a principal supply. Tax is levied on such composite supply with rate of tax which is applicable to principal supply.
Mixed Supply means which are two or more individual supplies of goods or services. This mixed supply is not naturally bundled and can be segregated from each other. Rate of tax on such supply if sold at single price shall be the higher rate which is applicable to anyone of the supplies.
Works Contract is a Composite Supply which is a bundle of supply of goods and supply of services used in the works contract.
The Legislature has treated Works Contract Supply as Supply of Services vide para 6 of Schedule II of the CGST Act.
Q 4. Input Tax Credit provisions for Works Contract ?
Ans: According to Section 16 of the CGST Act every registered person is entitled to input tax credit, subject to conditions and restrictions specified in rules, if the person made purchases to use or intended to be used in the course of or furtherance of his business.
But Section 17 (5) stops the registered person to avail input tax credit on such supplies which have been specified under this section 17 (5) of the CGST Act.
Section 17 (5)( c ) and 17 (5) (d) blocks input tax credit relating to supplies of Works Contract and goods or services or both received for construction of an immovable property.
Section 17 (5) ( c ) says that 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 service;
Section 17 (5)(d) says that 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.
Explanation.—For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;
On perusal of the above provisions it is cleared that
- ITC on Works Contract in relation to construction of immovable property is not available;
- ITC on Works Contract is not available if works contract service for immovable property is to be capitalized in the business;
- ITC is not available on such goods or services or both which are to be used for construction of immovable property;
- ITC on works contract is available if such service is to be used for plant and machinery;
- ITC on works contract is available if such service is to be further supplied by the recipient.
For example a factory owner gets construct factory shed for his business. Factory shed is an immovable property, therefore input tax paid to the contractor for supply of construction service for factory shed cannot be availed as input tax credit.
Further example a building developer may engage services of a sub-contractor for certain portion of the whole work. The sub-contractor will charge GST in the tax invoice raised on the main contractor. The main contractor will be entitled to take ITC on the tax invoice raised by his sub-contractor as his output is works contract service. However if the main contractor provides works contract service (other than for plant and machinery) to a company say in the IT business, the ITC of GST paid on the invoice raised by the works contractor will not be available to the IT Company.
Plant and Machinery in certain cases when affixed permanently to the earth would constitute immovable property. When a works contract is for the construction of plant and machinery, the ITC of the tax paid to the works contractor would be available to the recipient, whatever is the business of the recipient. This is because works contract in respect of plant and machinery comes within the exclusion clause of the negative list and ITC would be available when used in the course or furtherance of business.
Q 5. Notification for rate of tax in relation to Works Contract.
Ans: Rate of Tax for Works Contract is available at Serial No.3 of the Notification No.11/2017 – Central Tax (Rate). Analysis of this serial no.3 is as under:-
Heading of this Service is 9954;
Service name is “Construction Service”
Rate of tax under column no.(3) of the Notification is as under:
| Sub S.No. of S.No.3 | Construction Services | Rate of Tax | Condition |
| For ( I ), ( ia ), ( ib ), ( ic), ( id ) and ( va )
Rate of Tax for Construction commences on or after 01-04-2019 or in an ongoing projects in respect of which the promoter has not exercised option to pay tax applicable before 01-04-2019. |
|||
| ( i ) | Construction of affordable residential apartments by a promoter in a RREP | 0.75 | Condition applied |
| ( ia ) | Construction of residential apartments other than affordable residential apartments by a promoter in an RREP | 3.75 | Condition applied |
| ( ib ) | Construction of commercial apartments (shops, offices, godowns, etc.) by a promoter
in an RREP |
3.75 | Condition applied |
| ( ic ) | Construction of affordable residential apartments by a promoter in a REP other than RREP | 0.75 | Condition applied |
| ( id ) | Construction of residential apartments other than affordable residential apartments by a promoter in a REP other than a RREP | 3.75 | Condition applied |
| ( va ) | Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of affordable residential apartments covered by sub- clause (a) of clause (xvi) of paragraph 4 below | 6 | Condition applied |
| For ( ie ) and ( if )
Rate of tax for ongoing projects which constructions have been started before 01-04-2019 and for which the promoter has exercised option to pay central tax as applicable before 01-04-2019. |
|||
| ( ie ) | Construction of an apartment in an ongoing project under any of the schemes specified in sub-item (b), sub-item (c), subitem
(d), sub-item (da) and sub-item (db) of item (iv); subitem (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub-item (c) of item (vi), against serial number 3 of the Table |
6 | Condition applied |
| ( if ) | Construction of a complex, building, civil structure or a part thereof, including,—
(i) commercial apartments (shops, offices, godowns, etc.) by a promoter in a REP other than RREP; (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item in the manner prescribed herein, but excluding supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) above intended for sale to a buyer, wholly or partly, |
9 | Condition applied |
| ( ii ) | Omitted w.e.f. 01-04-2019 | ||
| For ( iii ), ( vi ) and ( vii )
Supply provided to the Central Government, State Government, Union Territory, a local authority, a Governmental Authority or a Government Entity by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of— |
|||
| ( iii ) | Composite supply of works contract as defined in clause (119) of section 2 of the CGST Act, 2017
(a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (b) canal, dam or other irrigation works; (c) pipeline, conduit or plant for (i) water supply, (ii) water treatment, or (iii) sewerage treatment or disposal |
6 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be |
| ( vi ) | Composite supply of works contract as defined in clause (119) of section 2 of the
CGST Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; or (c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017. Explanation.—For the purposes of this item, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities. |
6 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be |
| ( vii ) | Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, involving predominantly earth work that is, constituting more than 75 per cent of the value of the works contract | 2.5 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be |
| For ( ix ) and ( x )
Services provided by a sub-contractor to the main contractor providing services to the Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity. |
|||
| ( ix ) | Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (iii) or item (vi) | 6 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be |
| ( x ) | Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 provided by a sub-contractor to the main contractor providing services specified in item (vii) | 2.5 | Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be |
| ( iv ) | Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia),(ib), (ic), (id), (ie) and (if) above, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,—
(a) a road, bridge, tunnel, or terminal for road transportation for use by general public; (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awas Yojana; (c) a civil structure or any other original works pertaining to the “In-situ redevelopment of existing slums using land as a resource, under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban); (d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction/ enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (da) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development uthority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban); (db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/Lower Income Group (LIG)/ Middle Income Group-1 (MIG-1)/Middle Income Group-2 (MIG-2)” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban); (e) a pollution control or effluent treatment plant, except located as a part of a factory; or (f) a structure meant for funeral, burial or cremation of deceased. (g) a building owned by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961), which is used for carrying out the activities of providing, centralised cooking or distribution, for mid-day meals under the mid-day meal scheme sponsored by the Central Government, State Government, Union territory or local authorities. |
6 | No any Condition |
| ( v ) | Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, supplied by way of construction, erection, commissioning, or installation of original works pertaining to, —
(a) railways, including monorail and metro; (b) a single residential unit otherwise than as a part of a residential complex; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under— (1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (da) low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No.13/6/2009-INF, dated the 30th March, 2017; (e) post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or (f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages. |
6 | No any condition |
| ( viii ) | Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 and associated services, in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the
offshore area beyond 12 nautical miles from the nearest point of the appropriate base line. |
6 | No any condition |
| ( xi ) | Services by way of housekeeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017. | 2.5 | Condition applied |
| ( xii ) | Construction services other than (i), (ia), (ib), (ic), (id), (ie), (if), (iii), (iv), (v), (va), (vi), (vii), (viii), (ix), (x) and (xi) above.
Explanation.—For the removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib), (ic), (id), (ie) and (if) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry. |
9 | No any condition |
6. Definition of Original Work.
According to para 2 (zs) of the Notification 12/2017 – Central Tax (Rate) Original Work means –
“original works” means- all new constructions;
(i) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;
(ii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;
7. Place of Supply in case of Works Contract under GST.
Works Contract Service is a supply of service for immovable property. Place of Supply in relation to immovable property is governed by Section 12 (3) of the IGST Act,2017 where both Supplier and Recipient are located in India.
- Place of Supply shall be the location at which the immovable property is located or intended to be located.
- If location of immovable property is outside India, the place of supply shall be the location of the recipient.
In case where either the Supplier or the Recipient are located outside India the place of supply shall be the place where the immovable property is located or intended to be located as per section 13 (4) of the IGST Act, 2017.
8. Additional requirement of maintenance of accounts by the Works Contractor under GST.
In addition to normal course of maintaining of accounts by a Works Contractor, the Works Contractor shall have to maintain additional accounts as per rule 56 (14) of CGST Rules, 2017. It is reproduced as under:
“(14) Every registered person executing works contract shall keep separate accounts for works contract showing—
(a) the names and addresses of the persons on whose behalf the works contract is executed;
(b) description, value and quantity (wherever applicable) of goods or services received for the execution of works contract;
(c) description, value and quantity (wherever applicable) of goods or services utilized in the execution of works contract;
(d) the details of payment received in respect of each works contract; and
(e) the names and addresses of suppliers from whom he received goods or services.”
9. GST Registration clarification if work is done in other State.
The askGST_GoI clarified in its tweet as under :
Tweet – Whether civil contractor doing projects in various states requires separate registration for all states or a single registration at state of head office will suffice?
Reply – A supplier of service will have to register at the location from where he is supplying services.
For example a contractor of Delhi is providing works contract service at Gurgaon. He has no fixed place of business including ware house at Gurgaon. All services are being supplied from Delhi. Goods required to be used in works contract are also being sent directly at site of the works contract through delivery challan from godown in Delhi or through the Supplier who issues bill to Works Contractor of Delhi and ship to at Gurgaon site. In this case such contractor would not require to register himself in the state of Gurgaon.
If any of the terms of Place of business as defined under section 2 (85) of the CGST Act, 2017 is attracting in the case of the said Contractor, the contractor shall have to register himself from the state of Gurgaon. These terms are :
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called;
10. Advance Ruling on rate of tax specified under s.no.3 (v) of the Notification No.11/2017 – Central Tax (Rate).
Shree Construction (AAAR-MAHARASHTRA) dated – 03-01-2019
Applicant is providing works contract service as sub-contractor to main contractor for original contract work pertaining to railways.
The question before the Authority was that –
1. What tax rate to be charged by the applicant to main contractor on works contract services pertaining to railways original works contract.
2. Whether to charge tax rate of 12 per cent GST or 18 per cent GST.
The Authority for Advance Rulings ruled that The tax rate to be charged would be 12 per cent.
Para 11 of the Advance Ruling says – As regards the appellant’s contention that there is no specific mention of sub-contractor providing services in Sr. (v) as provided in item (ix) and (x) which were incorporated into the Notification 11/2017-C.T. by the amending Notification 1/2018, dated 25.01.2018, we are of the opinion that there was no need to include such sub-contractors in the item (v) of the Notification as there was no confusion whether the subcontractor will be eligible to such concessional rate of GST, since the activities described under item (v) of Sr.3 of the notification are services specific. The service provider and the service recipient are immaterial for the determination of beneficiary of this concessional rate of GST. That is, if the works contract services provided by the main contractor or sub-contractor are pertaining to the railways, the concessional rate of 12% GST is allowed to the person who carries out the such works contract pertaining to railways.
Thus tax on supplies as stated in s.no.3 (v) of the Notification No.11/2017 – Central Tax (Rate) shall be levied at the rate of six percent, it is immaterial who makes supplies either by the main contractor to the principal or by the sub-contractor to the main contractor if his supplies relating to original work as specified in s.no.3(v) of the said notification .
To reach to me for any suggestions, rectifications, amendments and/or further clarifications in regard of this article my email address is [email protected].
Author Bio
Pl clarify whether ITC on materials, labour and other services obtained in the course of construction of a building is available in case the same building is to be used for earning rent from leasing of building.
Thanx…now all doubts are cleared…thank you sir
OFFhand:
For his analysis, the writer has , among others, chosen to discuss with focus on, –
“Q 2. What is immovable Property for the purpose of Works Contract ?
Q 3. Whether Works Contract is Supply of Service or Supply of Goods or both ?”
The propositions thus framed in the form of posers do not, however, seem to have addressed, in proper light, wih due emphasis, on the following basic points:
A) Why and how a transaction of ‘sale and purchase’ of a UNIT (Apartment),- being an “immovable property” in any/every sense, – in a building complex could conceivably be treated as one of ‘works contract’; so as to validate, wrongly so, levy of VAT, since migrated to GST ?
B) Why and how the amendment of the Constitution he refers to- by virtue of which a way was found to justify levy of VAT (by ‘DEEMING’ such a ‘sale and purchase trasaction’ as a ‘works contract’) could, in any view, be regarded as applicable to the GST regime. For, so far as known, the underlying scheme of things governing GST are, in material respects, quite different and varying from the mentioined ‘deeming concept’ enacted for the VAT regime.
By and large there appears to be a disconnect between the several aspects covered; in as much as no attempot has been made to provide any definitive guidance to one and all concerned !
If so care to, the writer may wish to share his independent view points specifically on the impropriety or other wise of the two levies, still being debated in eminent professional circles; for which purpose, the related material avilable, for free, in public domain in the form of articles, etc.- particularly on this website itself may be of help/assistance !!!
OVER To…
If the main contractor is providing WC services to SEZ (immovable property is/intended to be situated in SEZ) and treating the same as Zero rated, whether the sub-contractor will also be eligible for Zero rated supply. Is there any mechanism that a WC service supplier providing Zero rated supply can procure such service at a subsidized rate to avoid accumulation of credit.