New Delhi, 16 Nov (KNN) A separate GST registration is not required in the state (the place of supply) by a subcontractor who was executing an infrastructure project, held the Karnataka bench of the GST Authority for Advance Rulings (AAR).  

This verdict protects the spirit of ‘Ease of Doing Business’. “The subcontractor can raise the invoice by charging integrated goods and service tax (IGST) from its office in Noida, Uttar Pradesh,” the bench said.

According to tax practitioners if this ruling is adopted across the country it will be a key factor which will reduce costs of both the registration and other administrative costs.

Looking at the shortcomings, the AAR also decided that in the absence of an office in Karnataka, the subcontractor cannot register as an input service distributor. Such registration was required to avail of the input tax credit against goods/services procured from suppliers at the site and distribute such credit onward to its Noida registration, as reported in TOI.

In this case, GEW India, a private limited company that had a unit in Noida and a registered office in Pune (Maharashtra), obtained a work order from Larsen & Toubro to execute a works contract inside a naval base at Karwar in Karnataka. It entailed a composite supply of goods and services, such as installation of a steel structure for harbouring of ships. The steel was fabricated at its Noida unit and installation was on-site.

GEW India explained that they are likely to provide accommodation in Karnataka for the resident engineer and others who may visit the work site, but will not have any office or administrative staff.

The AAR noted that the applicant company had only one principal place of business – Noida, for which GST registration had been obtained. Thus, there was no requirement for a separate registration in Karnataka for executing its contract.