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This ruling has wide implications on companies as it opens up doors for the execution of work contracts by companies away from their registered place of operation. Firms can now work without having to get multiple GST registrations if supply is merely for the execution of a contract and the entity has no intention to set up a permanent establishment outside their registered office.
IANS reported that the KAAR order came on clarity on taxation sought by GEW (India) Pvt. Ltd. This company got a sub-contract work from M/s L86T, claimed to be a works contract, for erecting steel structure cast and bolted on the ground in the civil foundation, at the site at Karwar, Karnataka. The scope of the contract involved procurement of structural steel from approved suppliers, fabrication to be done at GEW India factory premises at Noida, and transportation of material, and erection at Karvar site.
The applicant received the work order to execute the contract at Karwar in Karnataka. The supply here is in the nature of composite supply of goods and services involving supply, erection, and installation of steel after fabrication used for harboring/anchoring of ships and classified as service.
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The KAAR ruled that the applicant need not obtain separate registration in Karnataka, for the supply of services and can raise the invoice by charging IGST from their registered office at Noida, Uttar Pradesh, with the place of supply as Karnataka, IANS reported.
The authority said that the applicants are neither having nor intending to have any establishment at the site at Karwar, Karnataka, so they cannot obtain ISD registration for the site at which they are delivering service.
Though AAR ruling is case-specific, it can set a precedent for similar orders in other applications as well.
(With inputs from IANS)