Do You Need GST Registration in Another State for Construction Work?
Rajasthan AAR ruled that contractors working in another state do not need local GST registration unless they set up a permanent office there.
- Ruling
- ADVANCE RULING NO.RAJ/AAR/2018-19/07 dated 01.07.2018
- Dated
- 01 Jul 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Gujarat firm asked if Rajasthan GST registration is needed for local construction work.
- Authority ruled registration is required only if a fixed establishment is set up.
- Contractors without local offices can bill IGST using their home state registration.
In short
Jaimin Engineering Pvt Ltd, a company with Goods and Services Tax (GST) registration in Gujarat, won a project to construct cold storages in Rajasthan. They planned to manage the work directly from Gujarat without opening an office in Rajasthan and wanted to know if they had to register separately in Rajasthan. The firm applied to the Rajasthan Authority for Advance Ruling (AAR) in order Raj/AAR/2018-19/07 to get clarity on whether executing site work in another state requires a new local registration.
What has changed
How it worked before
Before this ruling, businesses undertaking works contract services in another state were often uncertain whether they had to register locally. Many contractors assumed that having an immovable property project in a destination state automatically required a separate local GST registration. As a result, businesses frequently opened unnecessary site offices or took multiple state registrations to avoid tax penalties.
What has changed
The Rajasthan Authority for Advance Ruling clarified that under Section 22(1) of the CGST Act, a supplier must register only in the state from where they make taxable supplies. Since the company had no permanent office or fixed establishment in Rajasthan, the location of the supplier remained Gujarat. The company can execute the project using its Gujarat registration by charging Integrated Goods and Services Tax (IGST) under Section 12(3)(a) of the IGST Act, avoiding the burden of a new state registration.
Who this affects
Construction companies, works contract suppliers, and engineering firms based in one Indian state that take up project work or build immovable structures in another state.
An example
A solar plant builder registered for GST in Maharashtra wins a contract to construct a solar power setup in Rajasthan. The builder sends equipment and engineers from Maharashtra to complete the job in eight months without renting a permanent office in Rajasthan. Based on the logic in order Raj/AAR/2018-19/07, the builder can issue an invoice from Maharashtra charging IGST rather than taking a new GST registration in Rajasthan.
What you should do
Businesses should evaluate whether their project setups in other states constitute a 'fixed establishment' with permanent staff and infrastructure. Remember that an advance ruling binds only the business that applied for it and their specific tax office. Other contractors in a similar position should consult a tax professional or apply for their own advance ruling before relying on this decision.
If you do nothing
If a tax officer decides your site setup acts as a fixed establishment, operating without a local GST registration can lead to penalties for non-registration. You risk paying local taxes (CGST and SGST) along with interest, while struggling to adjust the IGST you previously paid. Assuming another firm's advance ruling covers your business without legal verification can lead to expensive tax disputes.
The terms explained
- works contract
- A contract for building, constructing, or repairing an immovable property where both goods and labor are supplied together.
- fixed establishment
- A place other than the registered office that has permanent human and technical resources to supply or receive services.
- place of supply
- The location determined by GST laws that decides whether a sale is within the same state or between two different states.
The ruling in detail
Authority for Advance Ruling
M/S JAIMIN ENGINEERING PRIVATE LIMITED
ADVANCE RULING NO.RAJ/AAR/2018-19/07 dated 01.07.2018 · Rajasthan
Questions before the authority
- Whether applicant is required to be registered in the State of Rajasthan for executing construction work in Rajasthan while being registered in Gujarat
Facts
The applicant is a Gujarat-registered company engaged in the construction of cold storages across India. It proposed to undertake construction work in Rajasthan from its location in Gujarat without setting up an office in Rajasthan, by charging IGST. The applicant sought an advance ruling on whether it is required to obtain a separate GST registration in Rajasthan.
Ruling
| Question | What the authority ruled |
|---|---|
| Requirement of GST registration in Rajasthan | Not required **unless maintaining a fixed establishment in Rajasthan** If operating solely from Gujarat without a local office in Rajasthan, IGST can be charged under Gujarat registration |
The AAR held that a supplier of service must obtain GST registration in the State from where taxable supplies are made. The applicant is required to register in Rajasthan **only if it maintains a fixed establishment or office in Rajasthan** for its operations.
Reasoning
The Authority noted that under Section 2(119) and Para 6(a) of Schedule II to the CGST Act, works contracts are classified as supplies of services. Pursuant to Section 2(71) of the CGST Act and Section 2(15) of the IGST Act, the location of the supplier remains the state where the principal place of business is registered, unless a fixed establishment is established elsewhere. Although Section 12(3)(a) of the IGST Act specifies the place of supply as the location of the immovable property (Rajasthan), Section 22(1) of the CGST Act mandates registration in the State from where the supplier makes taxable supplies.
Provisions relied on
- Section 22(1) of the CGST Act, 2017
- Section 2(119) of the CGST Act, 2017
- Section 2(71) of the CGST Act, 2017
- Para 6(a) of Schedule II to the CGST Act, 2017
- Section 2(15) of the IGST Act, 2017
- Section 12(3)(a) of the IGST Act, 2017
For the practitioner
This ruling establishes that executing a works contract in a state outside the home state does not automatically require local GST registration. Contractors can supply services under **IGST from their home State registration** provided they do not establish a local office or fixed establishment in the project state.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/raj.07.2018-19_dtd_01.07.18-jepl.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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