The Maharashtra Authority of Advance Ruling (AAR) ruled that Work Contracts are applicable on immovable property, where goods and services are not distinct.
The Applicant, Prasa Infocom & Power Solutions Private Limited is engaged in the business of providing data center construction and contracting services.
M/s Cray Inc. has entered into a contract with the Indian Institute of Tropical Meteorology (IITM) for the supply of high-performance computing solutions (including its maintenance) and preparation and maintenance of Data Center. Cray has subcontracted the portion related to the preparation of the Data Center (including its maintenance) to the Applicant vide contract for the center project for the Ministry of Earth Sciences at Pune.
The applicant has sought the advance ruling on the issue of whether the supply of goods and service by Prasa Infocom & Power Solutions Private Limited to Cray Inc. (Cray) qualifies as a “works contract” as defined under Section 2(19) of the Central Goods and Services Tax Act, 2017.
The jurisdictional officer has also submitted that in the event the application is not reflected, from the definition of Works Contract under the GST Law, it is clear that works contract is applicable only in immovable properties for GST purpose and where the value of goods and services are not distinct and in the subject case, perusal of the copy of agreement/documents submitted by the applicant reveals that the value of goods/equipment is clearly distinct and separated from the value of services. Therefore, their project work is not classifiable under the Works Contract.
The Authority consists of members A.A. Chahure and P. Vinitha Shekhar agreed with the submissions of the jurisdictional officer and held that the supply of goods and service by the applicant to Cray Inc. does not qualify as “works contract” as defined under Section 2(19) of the Central Goods and Services Tax Act, 2017 (CGST Act.
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