Section 2(119) - Definition of "Works Contract" under CGST Act
2(119).1 Definition of Works contract
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Section 2(119) “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; |
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The expression ‘works contract’ is limited to contracts to do with immoveable property, unlike the existing understanding of the phrase which also extends to moveable property. A contract will amount to a ‘works contract’ only where there is a transfer of property in goods, while such a transfer may result in goods or anything else (i.e., immoveable property) |
Question-1 [ICMAI-F-CH7-46]
M/s Raji builders appoint M/s Viswa contractors for providing the service of plastering of walls. As per terms of contract M/s Raji builders provides the entire material namely cement, water, bricks and chemicals and so on. As a result M/s Viswa contractors does not use any material.
Is it works contract service?
Answer:
It cannot be considered as works contract service, as it does not involve the transfer of property.
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