CA Practice
135 Points
Joined March 2007
Section 2(119) of CGST Act defines works contract 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."(emphasis supplied)
Further, under Section 17(5) of the Act, no input tax credit shall be available in respect of 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.
You will therefore have to check whether:
(a) the installation is of any immovable property and the contract qualifies to be a works contract. If so, you have to further assess as to whether it is an input service for further supply of works contract service. If these conditions are satisfied, then you can charge GST in your bills and claim input credit for all your input goods and services.
(b) If the contract does not qualify to be a works contract (i.e., it is not in relation to an immovable property), or if is not an input service for further supply of works contract service; then you can not claim input credit.