No separate registration for companies providing Works Contract Services

NO NEED OF TAKING SEPARATE REGISTRATION IN GST TO PROVIDE SERVICES LIKE WORKS CONTRACT TO ANY OTHER STATE IN INDIA.

Construction Companies Or Contractors Are Confused About Taking Registration In The State Where They Get The New Works Contract Or Can They Perform With Only One Registration.

Suppose XYZ Is A Construction Company From Dehradun, Uttarakhand Is Into Construction Business Of Roads And Works On PAN India Basis Based Upon Their Requirements At Various Sites.

Since The Company Is Operating Both Within And Outside The State, Then Hence They Need To Transfer Certain Goods Machines To Another State.

Further, Their Construction Usually Takes More Than 6 Months To Complete And Hence, The Following Questions Emerge From The Above Problem:

1. SINCE, PROJECTS TAKE MORE THAN 6 MONTHS TO COMPLETE, WHETHER GST REGISTRATION IS TO BE TAKING IN EACH STATE FOR EACH PROJECT?
2. IF THE ANSWER TO THE ABOVE IS NO, THEN HOW TO TRANSFER MATERIAL TO UNDER STATE?

Before Answering The Above Questions Let Us Go Through Very Simple Things.

Firstly Forget CGST/SGST/IGST Lets Think In A Very Simple Manner What Was The Legislative View While Passing GST Act Every One Will Immediately Reply 'One Nation One Tax'.

Secondly If  XYZ Had To Take Separate Registration In All The State Wherever  XYZ  Is Awarded  Works Contract Then What Is The Primary Difference Between GST & VAT Registration?

Thirdly If  XYZ Will Have To Take GST Registration In All The Sates Then As Soon As The Company Finishes Work In Particular State What Will Company Do Further?

1. Either Company Will Have To Apply For Cancellation Of Registration Or
2. The Company Will Have To File Nil Returns (If Not Filed Will Be Penalized) Or
3. It Might Also Happen That While The Company Is In Process Of Cancellation Of Registration New Contract May Be Awarded To The Company

IT WILL BECOME HELL FOR THE CONSTRUCTION COMPANIES.EITHER CANCEL AND APPLY FOR NEW REGISTRATION OR KEEP ON FILING THE NILL GST RETURNS WHEREVER THERE IS NO WORK BUT THE REGISTRATION EXISTS.

ANSWER TO QUSETION NO 1:

Section 22 Of The ACT Reads As 'Every Supplier Shall Be Liable To Be Registered Under This Act In The State Or Union Territory, Other Than Special Category States, From Where He Makes A Taxable Supply Of Goods Or Services Or Both, If His Aggregate Turnover In A Financial Year Exceeds Twenty Lakh Rupees, Provided That Where Such Person Makes Taxable Supplies Of Goods Or Services Or Both From Any Of The Special Category States, He Shall Be Liable To Be Registered If His Aggregate Turnover In A Financial Year Exceeds Ten Lakh Rupees.'

"PLEASE NOTE FROM WHERE....MEANS WHERE HE IS REGISTERED"

Any Company Need Not Maintain The Separate GST Registration Because Under GST Regime, Works Contract Is Covered Under The Definition Of Service And Which Also Can Be Provided Directly From Dehradun, Uttarakhand To Anywhere In The Country.

Further, The Place Of Supply In Case Of Construction Of Bridges Shall Be The Location Of The Construction Site.

So If Company Is Executing Any Works Contract Outside The State, Then It Shall Be Treated As Interstate Supply And Therefore IGST Shall Be Applicable And Therefore, No Separate GST Registration Is Required To Be Maintained.

ANSWER TO QUSETION NO 2:

How Goods And Machine Shall Be Transferred To Project Site? Against Which Invoice The Goods And Machines Will Be Sent At The Construction Site Legally Under GST?

Material, Goods And Machines Can Be Easily Transferred Against The Delivery Challan In The Name Of The Client And At The Place Where Construction Is Taking Place. This Is Because When You Send Material To The Site, The Same Cannot Be Considered As A Taxable Supply And Hence, No Question Of Issuing Tax Invoice And Charging GST Arises.

If It Is Not Supply Then Why GST Is Charged In Case Of Stock Transfer?

GST Is Applicable In The Case Of Stock Transfer Because It Happens To A Related Party And As Per Schedule I, Any Supply Between Related Party Shall Be Considered As Supply With Or Without Consideration.

However, In Our Case, The Client And The ABC Company Is Not Related And Hence, Movement Of Any Material Without Consideration Is Not A Supply Under GST, Therefore Goods, Material And Machines Can Be Sent On Delivery Challan.

Now The Question When GST Registration Becomes Mandatory?

Suppose, If  You Open A Branch In Any State Other Than Your Registered State, Then Only GST Registration Is Mandatory This Is Because GST Registration Is Completely Dependent Upon The Place From Where You Are Making Supply. Hence, If You Open The Branch At Noida, Then GST Registration Shall Be Mandatory.

Conclusion

In The Light Of All The Analysis Done Above, We Can Conclude That GST Registration Is Not Required For Doing Projects Outside The State. However GST Shall Be Mandatory If You Open A Branch Outside The State.