Place of Supply in different states in the case of Works Contract

The impact of various provisions of GST Law becomes more complex in the dimensions which they create as one discusses these provisions. For instance, whether a person who is doing works contract in various states requires registration in all those states? The answer could be as follows:

• If a person is registered in a state say in Maharashtra and he is given works contracts by his client in four different states then it would obviously be very uneconomical for him to take all the things required by him for executing the works contract from his registered address in Maharashtra
• He would invariably be purchasing most of his inputs locally from the state in which the works contract is executed and would therefore be unable to take input credit unless he has a local registration
• The question which now arises is whether the purchases made by him in another state say Kerala can by any imagination be construed as an interstate supply for the person supplying the goods?

1. As specified in Section 8 (1) of the IGST Act, the answer to this would be an emphatic “No” the reason being that the place of supply and the location of the Supplier both are in the same state and therefore would constitute an Intra state sale.
2. However a close look at Section 12 (1) and 12 (2) of the IGST Act, which is triggered off when the item under consideration is not covered within the situations specified in Sections 12(3) to 12 (14) reveals that there could be a different dimension to this argument. As works contract is not covered under 12(3) to 12(14) it would be attracted under the residual clause 12(2)(b), for supplies made to an unregistered person the place of supply would be the location of the recipient where the address on record exists, which in the instant case is Maharashtra and therefore the place of supply could be construed as Maharashtra and therefore could be interpreted as an Interstate sale.
3. Now going further, if this is treated as an interstate sale then an IGST invoice would have to be raised on the recipient at his Maharashtra address for which he would be eligible to take input credit and the recipient could further do the billing for the works contract from Maharashtra by means of an IGST invoice on his client in Kerala
4. Now if suppose the registered office of the awarder company is also in Maharashtra and it asks the contractor to bill everything on its corporate address in Mumbai irrespective of where the work is actually undertaken then what happens? Would it mean that all these contracts would be billed as local supply of services by the contractor?

The dimensions of reasoning could go to great extents and only time will tell which interpretation would withstand the test of time