• Notification Date: 17-11-2021
  • Notification No: 36/2021-22

GST separate registration not required

The Karnataka bench of the GST Authority for Advance Rulings (AAR) ruled  that a separate GST registration is not needed in the state (the place of supply) by a subcontractor executing an infrastructure project.

Upholding the spirit of ‘Ease of Doing Business’ in its recent judgement, the bench said that the subcontractor can raise the invoice by charging integrated goods and service tax (IGST) from its office in Noida, Uttar Pradesh.

IGST is applied on interstate supply of goods and services. Decisions made by the AAR have a persuasive value. Tax practitioners say that if this ruling is adopted pan-India, it will go a long way in reducing costs — both the cost of registration and other administrative costs for business entities.

On the downside, the AAR also stated 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.

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 work 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.