Indian contractor's construction services in Maldives taxed as inter-state supply under Section 12(3) IGST Act 2017

AAAR Telangana ruled on place of supply for works contract services involving construction of an Institute in Maldives. The contractor (Indian company) supplied services to recipient in Delhi under India-Maldives MOU. Court held that supplier and recipient are separate legal entities under CGST Act. Since immovable property was located outside India, place of supply was determined as recipient's location in Delhi per Section 12(3) IGST Act 2017. Transaction constituted inter-state supply taxable under Section 7(1) IGST Act 2017.

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Issues Involved:
1. Applicability of GST to the construction of the Institute of Security and Law Enforcement Studies at Addu City in Maldives.
2. Identification of the recipient of the service.
3. Determination of the place of supply for the works contract.

Issue-wise Detailed Analysis:

1. Applicability of GST to the Construction of the Institute of Security and Law Enforcement Studies at Addu City in Maldives:
The appellant, a works contractor, argued that the construction services provided in Maldives should not be subject to GST as the supply is outside India. The appellant contended that the recipient of the service is the Government of Maldives, and thus, the place of supply should be Maldives under Section 13(4) of the IGST Act, 2017. However, the appellate authority held that both the supplier (the appellant) and the recipient (National Buildings Construction Corporation Limited, NBCCL) are located in India. According to Section 12 of the IGST Act, the place of supply for services related to immovable property located outside India is the location of the recipient, which in this case is India. Therefore, the supply falls within the ambit of GST.

2. Identification of the Recipient of the Service:
The appellant claimed that the Government of Maldives is the recipient of the service since the building is ultimately for their use. However, the appellate authority found that the contract for construction was between the appellant and NBCCL, not directly with the Government of Maldives. The agreement and payments were made by NBCCL, which acts as the executive agency for the Government of India. Therefore, NBCCL is identified as the recipient of the service.

3. Determination of the Place of Supply for the Works Contract:
The appellant argued that the place of supply should be determined under Section 13 of the IGST Act, as the location of either the supplier or the recipient is outside India. However, the appellate authority determined that both the supplier and the recipient are located in India. The place of supply for services directly related to immovable property is governed by Section 12(3) of the IGST Act. Since the immovable property is located outside India, the place of supply is the location of the recipient, which is NBCCL in India. Thus, the transaction is considered an inter-state supply and is subject to GST.

Final Ruling:
1. The construction of the Institute of Security and Law Enforcement Studies at Addu City in Maldives falls within the GST net.
2. National Buildings Construction Corporation Limited, Delhi is the recipient of the service.
3. The place of supply for the works contract is determined under Section 12 of the IGST Act, with the location of the recipient being in India. Therefore, the supply is subject to GST.

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