Construction of Institute outside India when Service Provider and Service Recipient in India

Last updated: 12 August 2021

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Quick Summary

This ruling clarifies GST applicability for construction services performed abroad when both the service provider and recipient are located in India. The Telangana Authority of Advance Ruling determined that GST applies because the service recipient is in India, even though the construction itself is overseas. The place of supply is deemed to be India, as per Section 12(3) of the IGST Act.

Court :
Telangana Authority of Advance Ruling

Brief :
In M/s. Sri Avantika Contracts (I) Limited, [GST-AAR 05/2021 dated August 05, 2021], ;M/s. Sri Avantika Contracts (I) Limited ('the Applicant') has sought an advance ruling on the issues of applicability of Goods and Services Tax ('GST') on construction of Police Academy in Maldives under a Memorandum of Undertaking ('MoU') between the Government of India and Maldives, the contract of which being awarded to National Buildings Constructions Corporation Limited. ('NBCC'), which in turn, sub-contracted to the Applicant by NBCC

Citation :
GST-AAR 05/2021 dated August 05, 2021

In M/s. Sri Avantika Contracts (I) Limited, [GST-AAR 05/2021 dated August 05, 2021], ;M/s. Sri Avantika Contracts (I) Limited ('the Applicant') has sought an advance ruling on the issues of applicability of Goods and Services Tax ('GST') on construction of Police Academy in Maldives under a Memorandum of Undertaking ('MoU') between the Government of India and Maldives, the contract of which being awarded to National Buildings Constructions Corporation Limited. ('NBCC'), which in turn, sub-contracted to the Applicant by NBCC

The Hon'ble Telangana Authority of Advance Ruling ('TAAR') stated, since the MoU is between Govt. of India and Maldives and the contract has been awarded to NBCC which is sub contracted to the Applicant, the Applicant does not have any successive relationship with the Govt of Maldives, thus, not providing any services directly to the Govt. of Maldives, instead NBCC, is the recipient of service by the Applicant.

Furthermore, it stated that both the Applicant and the Recipient are based in India, the place of supply is to be determined under proviso of Section 12(3) of the Integrated Goods and Services Tax Act, 2017 ('IGST Act') i.e. the location of the recipient, i.e, NBCC would be the place of supply in the above arrangement.

FAQ :

Yes, GST can apply if both the service provider and the service recipient are located in India, even if the construction work takes place overseas.

In this specific case, NBCC, which sub-contracted the work to the applicant, was considered the service recipient.

The place of supply is determined to be India, based on the location of the service recipient (NBCC), as per the proviso of Section 12(3) of the IGST Act.

No, the applicant does not have a direct relationship with the Government of Maldives; their contract is with NBCC.