Place of Supply for Works Contract Services for immovable property : Issues and Suggestions

Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India

6. Place of Supply for Works Contract Services

Section 12(3) of the IGST Act, 2017 provides that 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 co-ordination 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 organizing any marriage or reception or matters related thereto, official, social, cultural, religious or business function including services provided in relation to such function at such property; or

(d) any services ancillary to the services referred to in clauses (a), (b) and (c),

shall be the location at which the immovable property or boat or vessel, as the case may be, is located or intended to be located.

Issue

The provisions of section 12(3) also seem to cover works contract services provided in relation to an immovable property. Many a times works contract services are provided on the instruction of some third party and actual place of provision of service i.e. location of immovable property might differ from the location of the works contractor
or the person on whose instruction such works contract is undertaken. If we restrict the place of supply to location of immovable property the service provider would be mandated to register himself in the state where the immovable property is located.

Suggestion

It is suggested that in case of B2B supplies the place of supply be the location of service recipient irrespective of location of immovable property.

Read ICAI Suggestions on GST Act to Govt : July 2017

Related Topic on GST