GST Registration Needed at Precast Construction Sites Treated as Fixed Establishments: AAR Tamil Nadu Ruling Explained
1. Background of the Advance Ruling
The Authority for Advance Ruling, Tamil Nadu has, in the matter of In re Tvl. Teemage Builders Private Limited (GST AAR Tamilnadu), dealt with important questions on:
- When a construction site in another State becomes a “fixed establishment”
- Consequent requirement to obtain separate GST registration
- Whether movement of materials to such sites without consideration is treated as “supply”
- Whether procedural aspects like invoicing, delivery challans and e-way bills can be ruled upon under the advance ruling mechanism
M/s. Teemage Builders Pvt Ltd., holding GSTIN 33AADCT6964E1ZA, operates from Tirupur, Tamil Nadu. They specialise in precast concrete construction. The business model is:
- Precast components such as beams, columns, slabs, wall panels, staircases and cladding walls are manufactured at their own factory at Tirupur by “Precasting”.
- These precast elements are then transported to sites located across India.
- At the site, the elements are only assembled/erected mechanically (using cranes) into the final building. There is no conventional “on-site” construction of structural components.
- Contracts with customers are composite works contracts, with a single consolidated value covering manufacture, transport and erection.
The assessee approached the AAR seeking clarity on eleven questions relating to GST registration, the concept of fixed establishment, treatment of inter-State movement of materials, and several procedural questions around documentation and tax rates.
The AAR examined the maintainability of each query under Section 97(2) of the CGST Act, 2017, and then proceeded to rule on the admissible issues.
2. Issues Raised Before the AAR
The assessee sought advance ruling on, among others, the following core issues:
- Whether separate registration is needed in other States where works contracts are executed using precast elements manufactured in Tirupur, in the absence of what the assessee claimed is a “fixed establishment”.
- Whether site addresses within the same State (Tamil Nadu), where only a temporary site office exists, must be declared as additional places of business.
- Whether movement of materials to construction sites in other States, without consideration and without two separate legal entities, constitutes a “supply”.
- Several follow-up queries on:
- Whether invoices are required for such movement
- Whether delivery challans under
Rule 55(1)(c)can be used - Whether tax rates must be mentioned in delivery challans
- Possible mismatch of HSN/SAC codes and GST rates between e-way bills and final invoices
- Documents for movement and return of machinery, tools and equipment, including between two sites
The assessee contended that the application is maintainable under Section 97(2)(f) (requirement of registration) and Section 97(2)(g) (whether a transaction amounts to supply).
3. Factual Matrix and Contractual Arrangement
Under “statement of relevant facts” and “interpretation of law”, the assessee explained its business model as follows:
- It enters into contracts across India for construction of commercial buildings using precast technology.
- Key features of the agreements:
- The customer (employer) obtains statutory approvals (building plan, sanctions, etc.).
- The customer/consultant provides final architectural and MEP drawings.
- The customer also provides a temporary site office for the assessee’s staff.
- The entire superstructure is created using precast elements manufactured at Tirupur and then transported to the site.
- Contract value is a single figure for all activities: manufacture, transport and erection. The assessee treats this as a composite supply under
Section 2(30)of the CGST Act.
The assessee maintained that:
- At each site, only about 6–7 employees (engineers/supervisors) are deployed.
- Assembly is essentially mechanised through cranes, with minimal manual labour.
- Therefore, in their view, such sites do not qualify as “fixed establishments” within
Section 2(50)of the CGST Act. - Consequently, they argued that no separate registration is required in other States where the works contract is being executed.
They also pointed out that various materials like tools, accessories, consumables and cranes are regularly moved to sites for use in executing the works contract. According to the assessee, there is no transfer of property in these items to the customer, and they are not part of the works contract supply itself.
For support, the assessee relied on rulings of:
- In re GEW (India) Pvt Ltd (KAR/ADRG/63/2021)
- In re M/s. T & D Electrical (KAR/ADRG/18/2020)
- In re Jaimin Engineering Pvt Ltd (RAJ/AAR/2018-19/07)
In these rulings, the respective AARs had held that where there is no fixed establishment in another State, separate registration is not needed for the work site.