Works Contract service

Works Contract service :

“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- section 2(119) of CGST Act.

Works contract as defined in section 2(119) of CGST Act is ‘supply of service’ – para 6(a) of Schedule II of CGST Act.

A tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract is deemed sale of goods under Article 366(29A) of Constitution of India. [As inserted by 46th Amendment to Constitution in 1982]. Note that this Article in the Constitution of India is continuing even after Constitutional amendment.

Thus, the Constitution states that ‘works contract’ is deemed sale of goods, while GST Law states that it is ‘supply of service’

[in any case, GST is payable, but issues relating to rate, place of supply or time of provision of service can arise]