Home Case Index All Cases GST GST + AAAR GST - 2021 (6) TMI AAAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (6) TMI 1101 - AAAR - GSTInput Tax Credit - blocked credit or not - 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 - whether leasing of 'industrial plot' of land is exempt under N.No. 12/2017-Central Tax (Rate) but leasing of 'non-industrial plot' of land/commercial plot of land is a taxable supply? - HELD THAT:- Section 16 (1) of the CGST Act provides for entitlement of registered person 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 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, certain inward supply of goods or services, as enumerated under Section 17 (5) of CGST Act, 2017, has been specifically barred from taking Input tax credit. These supplies may also be termed as blocked credit. Sub-section 17 (5) carves out certain exceptions to Section 16 (1) by way of the non-obstante clause - “notwithstanding”, making it clear that the restriction imposed herein is absolute in nature as it seeks to override Section 16 (1) which entitles a registered taxpayer to avail credit on works contract services/goods or services used or intended to be used in the course or furtherance of business. Though the appellant was directed to submit copies of works contracts also, but they have not supplied the same; and it would appear from the facts of the case that they are not providing output service of works contract - it is found that input tax credit in general is not available for construction of an immovable property, in view of the above said provisions. The only exception to this provision is 'plant and machinery'. In other words the input tax credit is available to the taxpayer in respect of works contract services/goods or services used for construction of 'plant and machinery' in spite of their being an immovable property. It is found that Input Tax Credit is not only restricted to the goods and services used for construction of immovable property (whether capitalized or not) but also restricted for those goods and services which are used for re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. It is not the other way round that the Input Tax Credit is available to all the goods and services used for construction of immovable property which is not capitalized in the books of accounts. It is not the case of the appellant that said works contract is related to repair, reconstruction, renovation, etc. The appellant's undertaking of development work of the land to be leased out to various industrial/ non-industrial users, is construction of an immovable property and any goods and services or both / works contract, used for construction of an immovable property shall attract the provisions of clauses (c) and (d) under sub-section (5) of Section 17 of the CGST Act, 2017 which specifically deny such input tax credit. The appeal filed by the appellant is liable to be rejected for want of any merit, and hence rejected.
|