TMI Blog2022 (12) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied - Here, the supply of service (works contract service), the agreement which enforceable by law is entered into between M/s Sri Avantika Contractors (I) Limited and M/s NBCC Limited, New Delhi. Hence, the appellant M/s Sri Avantika Contractors (I) Limited, will be the supplier of Works contract service. On careful perusal of the definition of person under subsection (84) of section 2 of the CGST Act, 2017 and the definitions of company and foreign company under Section 2 of the Companies Act, 2013, it is observed that a company incorporated in India and a foreign company incorporated outside India, are separate person under the provisions of CGST Act and accordingly, are separate legal entities. Thus, a company incorporated in India and a body corporate incorporated by or under the laws of a country outside India (which is also referred to as a foreign company under the Companies Act) are separate persons under CGST Act, and thus are separate legal entities - the registered place of business of M/s Avantika Contractors (I) Limited, Maldives cannot be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d- 500 016 under Section 100 (1) of TGST Act, 2017 Against Advance Ruling TSAAR Order No. 05/2021, dated 05.08.2021 passed by the Telangana State Authority for Advance Ruling - Order-in- Appeal passed - Regarding. 1. The subject appeal has been filed under Section 100 (1) of the Telangana Goods and Services Tax Act, 2017 (hereinafter referred to as TGST Act, 2017 or the Act , in short) by M/s. Sri Avantika Contracts (I) Limited, 610-B, Nilgiri Blocks, Aditya Enclav, Ameerpet, Hyderabad- 500 016 The appellant is registered under GST having GSTIN number 36AAJCS5046C1ZG, The appellant is a works contractor and engaged in the business of civil engineering and construction works. The appeal is filed against the Order No. 05/2021, dated 05.08.2021( impugned order ) passed by the Telangana State Authority for Advance Ruling (Goods and Services Tax) ( Advance Ruling Authority / AAR / lower Authority ). 2. Brief Facts: 1. M/s Sri Avantika Contractors (I) Limited are 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 Addu City, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NBCCL) New Delhi Sri Avantika Contractor Ltd to construct the building at Addu City in Maldives. Hence Sri Avantika Contractor Ltd., is supplier of the service of the works contract and National Buildings Construction Corporation Ltd., New Delhi is the recipient of the Service. 8. Both the applicant who is the supplier of service NBCCL who is recipient of service are located in India and therefore the place of supply is to be determined under Section 12 of the IGST Act. 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 3. Lower authority, examined the submissions made by the Appellant and vide the impugned order, the Advance Ruling Authority had given the following Advance Rulings: In view of the observations stated above, the following rulings are issued with regard to the applicability of Not. No. 11/2017-CT(R), dated 28.06.2017 (as amended) to the below mentioned activities: Question Raised Ruling 1. Whether the construction of Institute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that supply of service by the appellant is neither inter-state nor intra-state and hence not taxable and is outside the purview of GST and laws of India, it is to be proved that:- (a) The location of the supplier or the location of the recipient are outside India. (b) The supply of service is in relation to immovable property. (c) The place of supply is outside India. 3. In the appellant's case, the supply of works contract service of construction of immovable property in Maldives by the appellant through its establishment located in Maldives does not attract GST and is outside the purview of Indian laws as explained below: 4. The location of supplier is outside India: 1. The determination of location of supplier and location of recipient are essential to determine the place of supply under the provisions of IGST Act, 2017. The term 'supplier' is defined under Section 2(105) of CGST Act, 2017 as supplier in relation to goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied. 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is a construction service which requires manpower and supply and execution of goods in the premises where immovable property is located and such supply cannot be undertaken from a distance from the head office of the appellant and can be executed and supervised only from the project office or branch office located at the place of construction. Hence, the office (fixed establishment) of the appellant registered in Maldives is directly concerned with the provision of the works contract service to the Government of Maldives. In the vase of Re: Jaimin Engineering Pvt. Ltd 2018 (17) G.S.T.L. 33 (A.A.R. -GST), the Advance Ruling Authority held as follows: 6. While supplying services if the supplier of services (i.e., applicant who in the given case is a works contractor and is registered in State of Gujarat) has any place of business/office in the State of Rajasthan i.e., has a fixed establishment for operation in the State of Rajasthan (place where the services are to be provided) then he is required to get himself registered in the State of Rajasthan. 6. The Maldives establishment of the appellant bears all the characteristics of a fixed establishment in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India and is liable to pay the consideration to the appellant on behalf of the Government of India. The location of NBCCL should be considered as the location of the recipient since the services are received by the Government of India through NBCCL and the term 'recipient' includes its agent as per the above definition. The location of the recipient is defined under Section 2(70) of CGST Act, 2017 and 2(14) of IGST Act, 2017 which are pari materia to each other and as extracted below: 'location of the recipient of services' means - (a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is received at a place other than the place of business for which the registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment. (c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and (d) in absence of such places, the location of the usual place of residence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taxable under the purview of GST Act, 2017 is, the 'place of supply' which is defined under Section 2(86) of CGST Act, 2017 as the place of supply as referred to in Chapter V of the Integrated Goods and services Tax Act . 2. The 1st Respondent erred in holding that the 'place of supply' is India in terms of Section 12(3) of IGST Act, 2017 as such finding is incorrect since the subject supply of construction by the appellant is covered under Section 13 of the IGST Act, 2017 as detailed below: 3. Section 12 is not applicable to the present case of supply of service, since 'the location of supplier' and 'location of recipient' are outside India. When either location of supplier 'or' location of recipient are outside India, Section 13 of IGST Act, 2017 is applicable. As elaborately discussed above, both supplier and recipient have fixed establishments in Maldives and the supply is being provided from the fixed establishment located in Maldives and the supply is being received by the fixed establishment of recipient in Maldives. Relevant portion of Section 12 and Section 13 of IGST Act 2017 are extracted below for ready reference:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the appellant is Maldives i.e., outside India. 8. The learned lower authority erred in not appreciating the facts and legal position that the supply provided by the appellant in the non-taxable territory of Maldives is outside the ambit of GST for the above reasons. The provisions of CGST Act and IGST Act, shall extent to the whole of India but not to non-taxable territory and when the entire supply and receipt of service is made outside India and when the supplier is also located outside India in the case of immovable property, GST laws of India cannot be applied. 9.1. In order to levy GST, the supply shall be classified as inter-state or intra state as defined under Section 7 of IGST Act, 2017 and Section 8 of IGST Act, 2017, respectively. The supply is intra state only when the place of supply of services and location of supplier are in the same State or Union territory. The same is not applicable to the supply in question for the reasons detailed above. In order to be classified as inter-state supply even when supply or location is outside India, the supply shall fall under clause (4) or (5) of Section 7 of IGST Act, 2017 which is extracted as below:- 7. Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Findings : 7. The objections raised by the applicant are examined with the following observations:- 1. The applicant mainly contends that the location of the applicant and location of the recipient is outside India, hence the place of supply should be determined as per the provisions of section 13(4) of the IGST Act, 2017. 2. On verification of the contract documents it is noticed that National Building Construction Corporation Ltd, Delhi entered into contract with M/s Avantika Contractors (I) Limited, Hyderabad, Telangana for the Construction of institute for security and law enforcement studies at Addu, Republic of Maldives . 3. As per the agreement, the applicant will receive consideration for implementing the project from NBCC(India ) Ltd in Indian Rupees (As per clause 3.6 of Agreement for setting up of the Institute for security and law enforcement studies (ISLES) at ADDU city in Maldives dated 8-7-2016) and the laws applicable to the contract is the laws in force in India. (As per clause 5.1 of Agreement for setting up of the Institute for security and law enforcement studies (ISLES) at ADDU city in Maldives dated 8-7-2016). 4. The applicant also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The applicant all along contends that the transaction is that of Works Contract service. In this context, the definition of Works Contract as per Sub-section 119 of Section 2 of CGST Act, 2017 is reproduced as under :- (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; 9. Therefore, the essential element of a works contract is that it is a contract between the supplier and recipient. Contract is defined under Sub-section (h) of Section(2) of The Indian Contract Act, 1872 as : An agreement enforceable by law is a contract; 10. In order to determine, the Place of Supply, it is necessary to determine the supplier and recipient of the supply and the location of the supplier and recipient. In this context, it is necessary to examine the definitions of Supplier and Recipient as per the Provisions of the CGST Act, 2017 Section (2), Sub-section (105) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign company under Section 2 of the Companies Act, 2013, it is observed that a company incorporated in India and a foreign company incorporated outside India, are separate person under the provisions of CGST Act and accordingly, are separate legal entities. Thus, a company incorporated in India and a body corporate incorporated by or under the laws of a country outside India (which is also referred to as a foreign company under the Companies Act) are separate persons under CGST Act, and thus are separate legal entities. 16. Hence, the registered place of business of M/s Avantika Contractors (I) Limited, Maldives cannot be considered as fixed establishment of M/s Avantika Contractors (I) Limited, India. 17. In view of the above, the applicants contention that the location of supplier of services in Maldives is not correct. As per Section 2(15) of IGST Act,2017 Location of Supplier of Services is registered Place of business of the applicant i.e Hyderabad. 18. Further, Section (2), Sub-section (93) of the Act defines Recipient as (93) recipient of supply of goods or services or both, means - (a) where a consideration is payable for the supply of goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Now, since the Location of the supplier and the location of the recipient are determined, we may proceed to examine the provisions relating to Place of Supply. 24. Here, in this case as both the location of the recipient of services and location of supplier of services are located in India and also since service is directly in relation to construction of an immovable property, the provisions of section 12(3)(a) of the IGST Act,2017 would apply . The contents of which are reproduced as under :- (3) The place of supply of services,- (a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or coordination of construction work; or (b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and including a house boat or any other vessel; or (c) by way of accommodation in any immovable property for organising any marriage or reception or matters related thereto, official, social, cultural ..... X X X X Extracts X X X X X X X X Extracts X X X X
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