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2021 (3) TMI 1380 - AAR - GSTInput Tax Credit - goods/services received for construction of hotel building - work contract service received for construction of hotel building - goods/services received for construction of banquet hall which is rented further to customer - work contract service received for construction of banquet hall which is rented further to customer - input credit on work contract service or any goods/service received for construction of such hotel/banquet hall - expression “plant & machinery” would include hotel/banquet building' under section 17 - specified goods viz. lifts, sanitary items, underground cables etc. fall under the expression “plant & machinery” or not - freight paid to GTA on such items under RCM - Section 17(5)(c) & 17(5)(d) of CGST Act. HELD THAT:- Powers to restrict flow of credit also exist under Section 16(1) of the CGST Act which empowers the Central Government to impose conditions and restrictions on availing input tax credit. This shows a Legislative intent that input tax credit may not always be allowed partially or fully. Input tax credit provisions do not provide for that all the tax paid on inputs should be available as credit. Some credits have been denied under Section 17 in the Act itself and to allow flexibility, the Act provides that restrictions can be placed on availability of credit - under the GST regime, more input tax credit is available to tax payers along the entire supply chain as compared to the previous tax regime. Further, the transitional provisions under the CGST Act provide adequate credit of taxes accumulated under the erstwhile taxation regime to taxpayers in the GST regime. The legislative intent flows from the sovereign power given in the CGST Act, 2017 vide Section 16(1) of the Act. As per said provision input tax credit is allowed to a registered person subject to such conditions and restrictions as the Government thinks proper, against the supply of goods or services received which are used or intended to be used in the course or furtherance of his business. Here it is pertinent to mention that construction of an immovable property (hotel/restaurant or banquet hall) is a different business and hotel accommodation or renting of banquet hall is a different business. Thus supply chain is not the same for both the businesses. The thin line here is the break in the nature of business. For both the businesses input supply of goods or services are totally different from each other. Input supply of goods or services received for one business cannot be used for furtherance of other business. Lifts, Sanitary items and underground cables etc - HELD THAT:- Lifts, Sanitary items and underground cables etc. being integral parts of a building are immovable properties as these items are attached to building for the permanent beneficial enjoyment of the said building and therefore cannot be termed as “plant and/or machinery”. Availability of input credit on the same and freight paid to GTA on such items under RCM, Repair & maintenance of specified goods and Architect services etc. - HELD THAT:- Section 17(5)(c)(d) blocks credit of input tax when works contract services are supplied for construction of an immovable property as well as when goods or services or both received by a taxable person for construction of an immovable property where immovable property is not “plant and/or machinery”. Since Lifts, Sanitary items and underground cables etc. are also immovable property therefore input tax credit of works contract service supplied for construction of these items or goods or services or both received for construction of these items together with construction of hotel/banquet hall will also not be available to the applicant, however this aspect of allowing input tax credit under Section 17(5)(c) & (d) is pending decision before Hon'ble Supreme Court in case of M/s Safari Retreats Pvt. Ltd [2020 (3) TMI 1150 - SC ORDER]. Repair & Maintenance itself is not a construction service. Roll of repair or maintenance starts when a building or any immovable property comes into existence. Repair & Maintenance is done on the already constructed buildings, civil structures etc. Further, input tax credit of the GST paid on Repair & Maintenance service supplied for repair or maintenance of an immovable property is not denied under CGST Act. Therefore input tax credit of the GST paid on Repair & Maintenance service is allowable under CGST Act.
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