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2020 (7) TMI 803 - AAAR - GSTInput Tax Credit - GST paid on goods and services used as inputs in execution of "Works Contracts" - execution of Road work contracts to Government Engineering Departments - on which type of goods/ services the ITC is not eligible? - blocked credit under Section 17 (5) (c) or Section17(5)(d) of the CGST Act, 2017 - HELD THAT:- As described in the agreement copy submitted by the applicant, it is evident that the applicant is engaged in the activity of construction (reconstruction) of roads for the Engineering Department, GoAP in which the following predominant goods and services are incorporated in execution of the works - it is evident that the nature of activity undertaken by the applicant is a composite supply involving both goods and services used for construction /reconstruction of roads, which is an immovable property and therefore satisfies the definition of "Works Contract Service" as defined under Section 2 (119) of the CGST Act, 2017. The service of Works Contract Service (WCS) provided for the construction of a "road" is liable to GST © 12% (6°/o CGST + 6°/o SGST) as per SI. No. 3 (iv) (a) of Notification No.11/2017-CT(Rate) dated 28-6-2017 as amended. There is no restriction on availment of ITC in the said Notification. Eligibility of the applicant to claim input tax credit in respect of the supply of Works Contract Service - HELD THAT:- It is evident that the inputs and input services of the applicant arc used in the course or furtherance of business i.e., works contract business and the said works contract service is a taxable service under GST and liable to tax at the rate of 12%. At this juncture it is made clear that compliance with the provisions of Section 16 (2) is a matter of fact and procedure and the applicant is to comply with the same to be finally eligible for ITC. This procedural compliance is not being challenged here and hence not commented upon by this Authority. Having said that, it is noted that the applicant is a Registered Taxpayer under the GST law, he is engaged in the provision of a taxable service (works contract service) in the course of business. As such, the applicant satisfies the basic requirements of Section 16 and is entitled to Input Tax credit (ITC) in general, of course subject to the compliance with the other procedural requirements mentioned. Whether the ITC sought to be availed by the applicant is "Blocked" under Section 17 (5) (c) or Section17(5)(d) of the CGST Act, 2017? - HELD THAT:- It is clearly evident that what is blocked Under Section 17 (5) (c) is the ITC of tax paid on the Works Contract service when sought to be availed by the Principal (i.e., Engineering Departments). This is not the case in this appeal. The applicant in this appeal seeks a ruling on whether he can avail credit on goods and services used to provide Works Contract Service to the Principal - there is no bar under Section 17 (5) (C) to prevent the applicant from availing ITC on goods and services used in supplying Works Contract Service. The applicant, a registered person under the GST law, engaged in the business of Works Contract Service, liable to GST at the rate of 12% vide Notification No.11/2017-CT(Rate) dated 28-6-2017 as amended, and where no restriction on availment of ITC is prescribed therein, is also not affected by the restriction under Section 17 (5) (C) and Section 17 (5) (d) of the CGST Act, 2017 and is therefore entitled to credit on the inputs i.e, goods and services used for providing the output service of Works contract service for construction of roads for the State Government Departments - the original order of the AAR is upheld.
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