Work Contract Service in GST

[mk Jain]

Dear Sir,

Earlier definition of work contract service is : works contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property.

Now in GST : only contracts related to immovable property are to be considered as works contract. and as per me this covered in composite supply.

If person doing provide AMC of their equipment and supplying service with parts (Goods) then how treat in new regime & which service covered these activity.

Rgds,

M K

[Rajagopalan Ranganathan]

Sir,

As per Section 2 (119) of CGST Act, 2017 “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract.

Sl. No. 6 of Schedule II of the above Act stipulates that "works contract as defined in clause (119) of section 2 and supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.

Since movable property is not included in the definition of works contract, in respect of movable properties supply of spare parts will be treated as supply of goods and the service portion will be treated as supply of service. This is my opinion.

[DR.MARIAPPAN GOVINDARAJAN]

The views of Shri Vishnu is correct on the interpretation of the word 'works contract' as defined in CGST Bill. Providing AMC of equipment and supplying with parts are treated as supply of goods and services as per view of Shri Ranganathan Sir.

[JAIPRAKASH RUIA]

CGST Actsection 15, subsection 2, clause b read as under :

(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both;

Dear Sir,

Whether value of free supply of material by recipient of services will be includible under the new Act considering the above or still there is ambiguity as earlier in service tax and the matter is in court.

Thanks

Jaiprakash Ruia

[Govind Gupta]

Hello Sir

We also have AMC business and there are basically two types of AMC, one which is normal AMC, where only services are rendered and one which is comprehensive which involves both labour and parts, the AMC is for Chillers ( large HVAC equipments which are fitted into building, not sure even though these are classified as Plant & Machinary whether these falls under moveable or immoveble property,

In present tax scenario, both vat and service tax is paid on the fixed value ( not 100%) comprehensive AMC invoicing ( cascading impact and issues on input credit at our customer end), under the GST law, how the treatment will change considering the definition of work contract tax and composite supply, what will be the classification and nature of such comprehensive AMCs,

Thanks

AI Summary

Works contract definition limits contracts to immovable property, so AMCs with parts are split into goods and services. Works contract in GST covers only immovable-property contracts involving transfer of goods; for movable-property maintenance (such as comprehensive AMCs) the goods portion (spare parts) is treated as supply of goods and the labour/maintenance portion as supply of services. This bifurcation interacts with composite-supply analysis but does not convert movable-property maintenance into a works contract. Valuation uncertainty remains about inclusion of recipient supplied materials in taxable value, and classification of installed equipment as movable or immovable affects treatment.