Works Contract to construct IIT, Bhubaneswar to be considered as Composite Supply Contract Read more at: https://www.caclubindia.com/judiciary/judiciary_add.asp

Last updated: 26 August 2021

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The Odisha Appellate Authority of Advance Ruling (OAAAR) has determined that the construction works contract undertaken by NBCC (India) Limited for IIT Bhubaneswar should be classified as a composite supply. This ruling clarifies that the turnkey project, encompassing planning, design, and construction, falls under the definition of 'works contract' and is treated as a supply of service under GST law.

Court :
Odisha Appellate Authority of Advance Ruling

Brief :
In M/s. NBCC (India) Limited [Order No. 02/ODISHA-AAAR/Appeal/2020-21 dated March 19, 2021], M/s. NBCC (India) Limited ('the Appellant') aggrieved by Advance Ruling No. 01/ODISHA-AAR/2020-21 dated October 01, 2020 has sought clarification as to whether works contract executed by them of construction of IIT, Bhubaneswar can be treated as composite supply under Goods and Services Tax ('GST').

Citation :
Order No. 02/ODISHA-AAAR/Appeal/2020-21 dated March 19, 2021

In M/s. NBCC (India) Limited [Order No. 02/ODISHA-AAAR/Appeal/2020-21 dated March 19, 2021], M/s. NBCC (India) Limited ('the Appellant') aggrieved by Advance Ruling No. 01/ODISHA-AAR/2020-21 dated October 01, 2020 has sought clarification as to whether works contract executed by them of construction of IIT, Bhubaneswar can be treated as composite supply under Goods and Services Tax ('GST').

The Hon'ble Odisha Appellate Authority of Advance Ruling ('OAAAR') observed that is it clearly stated in the agreement between the Appellant and IIT Bhubaneswar that the Appellant is entrusted with the entire project on turnkey basis for work relating to Planning, designing, and supervision of construction of various building infrastructure development and interior work, etc.

Such a turnkey project is a 'works contract' as per Section 2(119) of the Central Goods and Services Tax Act, 2017 ('CGST Act'). The same is to be treated as composite supply under Section 2(30) of the CGST Act.

Noted, that Composite supply works contract is treated as a “supply of service' under Schedule II Para 6 of the CGST Act. OAAAR, therefore was not inclined to accept the decision provided in Advance Ruling No. 01/ODISHA-AAR/2020-21.

FAQ :

The case concerned whether the works contract for the construction of IIT Bhubaneswar, executed by NBCC (India) Limited, could be treated as a composite supply under the Goods and Services Tax (GST).

The agreement entrusted NBCC with the entire project on a turnkey basis, covering planning, designing, and supervision of construction for various building infrastructure and interior works.

The OAAAR classified the project as a 'works contract' as per the CGST Act, 2017, and further determined it to be a 'composite supply' under the same act.

Composite supply works contracts are treated as a 'supply of service' under Schedule II, Para 6 of the CGST Act.

No, the OAAAR was not inclined to accept the decision provided in the initial Advance Ruling No. 01/ODISHA-AAR/2020-21.