Internal Circular issued by the Office of The Principal Commissioner, CGST & CX, Silliguri
A Departmental internal circular issued to senior CGST formations adopts a “substance over form” approach to scrutinize contractor–subcontractor models in works contracts. This circular takes a very strict view of contractor–subcontractor arrangements. According to the circular, when a main contractor awards almost the entire project to a subcontractor, including procurement of materials, on‑site execution, and all construction risks, the subcontractor is actually carrying out the works contract service. In such cases, any “accretion” to the immovable property (that is, the point at which materials get permanently attached to the structure) happens at the subcontractor’s level, and not at the contractor’s end. The Department thereby argues that the main contractor is not providing any works contract service to the ultimate project owner but reduces the role of the main contractor to a contractual intermediary.
