Is a Works Contractor required to be registered under GST, in each state where he is rendering his Services?

Posted By on June 27, 2018

A detailed analysis of the registration requirement of Works Contractor is done below:-


1.  What is Works Contract?


Works contract has been defined under Section 2 (119) of the CGST Act, 2017 as below:-


“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;


2. Whether Works Contract is supply of Goods or Supply of Services?


As per Para 6(a) of the Schedule II to the CGST Act, 2017 read with Section 7, following Composite Supply shall be treated as supply of services:-


      6 (a) works contract as defined in clause (119) of section 2;


3.  What is the requirement of Registration under GST?


As per Section 22 (1) of the CGST Act, 2017 a supplier is required to get registered under GST as below:-

“Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees:

Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.”



4. What is the Location of the Works Contractor?


A) In case of a Works Contract, generally the Works Contractor undertakes to deliver his services at the Location of the recipient of Service, without establishing his place of business in that place.

B) The Location of the Works Contractor shall remain to be the state where his principal place of business is registered (unless he has established his office/ establishment in the place where the services are supplied).


5. What will be the Nature of Supply, where the Works Contractor and Recipient of Service are in Different States/ UT of India?


As per Section 7(3) of the IGST Act, 2017 (noted below for ready reference), where the supplier and recipient of service are in different states/ UT then such supply of Service shall be treated as in the course of Inter State trade or commerce.


Section 7 (3) : “Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in––

(a) two different States;

(b) two different Union territories; or

(c) a State and a Union territory,

shall be treated as a supply of services in the course of inter-State trade or commerce.”



6. What is the place of ‘supply of service’ in case of Works Contract?


As per Section 12 (3) (a) of the IGST Act, 2017, in case of Works Contract Service the Place of Supply shall be the location at which the immovable property in respect of which the Work Contract has to be executed is located.




In light of the legal provisions discussed above, I am of the view:-

1. That If the Location of the Works Contractor and the recipient of Service are in two different states, the supply of service shall be treated as an Inter State Supply and IGST will have to be charged by the Works Contractor;


2. That there is no requirement for a Separate Registration in each state where a Works Contractor is working and he is permitted to make Inter State Supply from the principal state where he is located and registered under GST.

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