ITC of IGST charged with different POS while registered in other state

[Krishna Murthy]

Sir,

Mr A is the Main Contractor registered in Andhra Pradesh and obtained works contract to construct immovable property in Delhi. Mr A sub-contracts the said work to Mr B who is also registered in Andhra Pradesh. As per Advance Ruling in the case of T & D Electricals (AAR Karnataka) = 2020 (4) TMI 693 - AUTHORITY FOR ADVANCE RULING, KARNATAKA, separate registration is not required to be taken and works contract can be done by charging IGST.

Now the query is, whether Mr A, the Main Contractor is eligible to take ITC of the IGST charged by Mr B, sub contractor. Though, both Mr A and Mr B resides in the same state, since POS is Delhi, it is necessary that Mr B charges IGST stating POS as Delhi.

[Rajagopalan Ranganathan]

Sir,

According to Section 12 (3) (a) of IGST Act, 2017 "

"The place of supply of services,––

(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related experts or estate agents, any service provided by way of grant of rights to use immovable property or for carrying out or co-ordination of construction work shall be the location at which the immovable property is located or intended to be located.

In your case the immovable property is located in Delhi. therefore the place of supply is Delhi. Therefore sub-contractor b will charge IGST on main contractor A and A is eligible to take credit of IGST paid by B.

[Shilpi Jain]

Availing the IGST credit with PoS being a state other than the State of registration would be disputed by the department. Form GSTR-2B will also show this as an ineligible credit.

If credit is huge could consider taking registration at Delhi.

[KASTURI SETHI]

Dear Querist,

The AAR decision is applicable only to the Applicant. Facts are not similar. As per definition of Place of Business under Section 2(85) of CGST Act, 'B' has correctly obtained registration in Andhra Pradesh. So charging IGST is not beyond dispute, especially, in view of 'Immovable Property'. To be on safer side, opt for Advance Ruling.

[KASTURI SETHI]

In continuation of my earlier reply, for registration purpose place of supply is not crucial factor. Place of business is the most relevant factor. Whether buyer or receiver is able to utilise IGST ? This aspect has also to be taken care of.

AI Summary

Main Contractor's IGST Credit Claim Disputed Due to Different Place of Supply; Consider Delhi Registration or Advance Ruling. A main contractor, registered in Andhra Pradesh, subcontracts work to another contractor from the same state to construct property in Delhi. The issue revolves around whether the main contractor can claim Input Tax Credit (ITC) on Integrated Goods and Services Tax (IGST) charged by the subcontractor, given the Place of Supply (POS) is Delhi. Responses highlight that while IGST can be charged, claiming credit might be disputed due to the POS being different from the registration state. Suggestions include considering registration in Delhi or seeking an Advance Ruling for clarity on utilizing IGST credit.