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2021 (2) TMI 1293 - AAR - GSTInput Tax Credit - Input services - construction or works contract procured for the development of an Industrial area or the special maintenance expenses of the area? - mechanism for apportionment of ITC between exempt and taxable supplies as in an industrial area - long term leasing of 'industrial plot' of land is exempt under N/N. 12/2017-Central Tax(Rate) or not - leasing of 'nonindustrial plot' of land/commercial plot of land is a taxable supply or not? HELD THAT:- Section 16 (1) of the CGST Act specifically provides that every registered person shall be entitled to take credit of the input tax charged on any supply of goods or services or both made to him, which are used or intended to be used in the course or furtherance of his business. Such entitlement is subject to fulfillment of certain conditions such as possession of invoice, receipt of goods/service, payment of tax to Government etc. as provided under Section 16(2) of the GST Act, 2017. However, the availability of credit is subject to the restrictions as stipulated under Section 17(5)(d) of the GST Act, 2017. Section 17(5)(c) and (d) of the CGST Act, 2017 denies availment of ITC on works contract service and on goods and services when supplied for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the furtherance of business. Applicant does not deny that the civil work i.e. roads drainage, approaches, culverts, rain water harvesting system, power supply related work like laying of new power lines, street light work, work for common facilities in the industrial area like Administrative office, building for fire tenders, Post office/Bank building etc. is an immovable property. In fact, they have obtained land from state Government/private land and after the development work, the land is allotted on lease to the various persons who applies for the same - as per Sub Section 5(c) and 5(d) of Section 17 of CGST Act, 2017 the input tax credit will not be allowed for works contract service and on the goods and service used by the taxable person on his own account. Since, the work done by the applicant on the acquired land is not of the nature of any type of repair or maintenance on immovable property, but a new fixed asset is constructed and it appreciate the value of the property/land - such expenses, which enhance the value of the property permanently and as per accounting convention, the expenditure are capital in nature, has to be capitalized and cannot be treated as revenue expenditure. The applicant's contention cannot be accepted. Therefore, as per Section 17(5)(c) & (d) of the CGST/RGST Act, 2017, No ITC is available to the applicant. ITC not available - application disposed off.
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