Composite Works Contract, Place of Supply and Pure Agent Reimbursement

For services directly in relation to immovable property, including works contract services for construction, section 12(3) of the IGST Act fixes the place of supply at the location of the immovable property. The property is in Bengaluru, Karnataka. The supplier is in Maharashtra and the place of supply is Karnataka, so this is an inter-state supply under section 7 of the IGST Act. IGST applies, not CGST plus SGST. The fact that GreenSpace is registered in Maharashtra and the recipient is registered in Karnataka does not change the result; section 12(3) overrides the general recipient-location rule in section 12(2). The company's belief is incorrect.

For services, section 13 of the CGST Act provides that the time of supply is the earlier of the date of invoice (where the invoice is issued within 30 days of supply) or the date of payment. The invoice is dated 28 March 2025 and payment is received on 15 April 2025. The earlier date is 28 March 2025. Therefore, the tax liability arises in March 2025, and GreenSpace must report the supply in the return for March 2025, even though cash is received in April. If the invoice had been issued after 30 days from completion, the date of completion would be substituted, but that is not the case here.

Rule 33 of the CGST Rules excludes pure agent reimbursements only if strict conditions are met: a contractual agreement to act as pure agent, no markup, separate invoice, expenditure incurred on behalf of the recipient, recipient liable to pay, and the amount shown separately. Here GreenSpace obtains municipal permission in its own name and does not issue a separate invoice in the client's name. Those facts fail the pure agent test. The Rs 2,00,000 is therefore part of the value of the composite works contract. The taxable value is Rs 82,00,000, and GST at the applicable works contract rate is payable on that amount. The company cannot treat the reimbursement as outside GST.