means a contract for building, construction, fabrication,
completion, erection, installation, fitting out, improvement,
repair, maintenance, renovation, alteration or commissioning
of any immovable property
wherein transfer of property in goods (whether as goods or in some
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
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]
Works contract is essentially and inherently a contract of service,
irrespective of legal fiction created by Article 366(29A) of Constitution
of India – Larsen and Toubro Ltd. v. CST (2015) 318 ELT 633 (CESTAT LB 3
v. 2 decision)
Basically, works contract is a contract for work, where supply of material
is incidental to the contract for work.