Contractor's GST liability determined by recipient's location under Section 12 despite overseas construction work

AAR Telangana ruled on GST territorial jurisdiction for construction services in a works contract case. A contractor was engaged by an Indian corporation to construct a police academy in Maldives under an India-Maldives MOU. The AAR held that the contractor's direct contractual relationship was with the Indian corporation, not the Maldivian government. Since both supplier and recipient were located in India, the place of supply was determined under Section 12 of IGST Act. However, as the immovable property was located outside India, the place of supply was deemed to be the recipient's location per the statutory proviso.

---

---

Issues involved:
1. Clarification sought on the applicability of GST on the construction of an institute in Maldives under a memorandum of understanding.
2. Determination of the recipient of service in the case.
3. Identification of the place of supply for the works contract in Maldives.

Analysis:

Issue 1: Applicability of GST on construction in Maldives
The applicant contended that the construction service provided for the Institute of Security and Law Enforcement Studies in Maldives, under an MOU between India and Maldives, does not constitute a taxable supply as it is outside India. However, the ruling authority found that the applicant and the recipient, National Buildings Construction Corporation Ltd., are both located in India. Therefore, as per Section 12 of the IGST Act, the place of supply is determined to be in India, making it subject to GST.

Issue 2: Recipient of service
The ruling clarified that the recipient of the service in question is the National Buildings Construction Corporation Ltd. (NBCCL) and not the Government of Maldives. The applicant did not have a direct contractual relationship with the Government of Maldives, establishing NBCCL as the recipient of the service.

Issue 3: Place of supply for works contract in Maldives
Considering that both the supplier (applicant) and the recipient (NBCCL) are located in India, the place of supply for the works contract in Maldives is determined under Section 12 of the IGST Act. The ruling highlighted that if the immovable property is intended to be located outside India, the place of supply shall be the location of the recipient, which in this case is NBCCL.

The ruling provided detailed analysis and clarification on each issue raised by the applicant, emphasizing the legal provisions under the GST Act and IGST Act to determine the applicability of GST, the recipient of service, and the place of supply for the works contract in Maldives.

---