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2024 (2) TMI 553 - AAAR - GSTIneligibility for claiming ITC on inward supplies of goods or services used for construction on account of own use - applicability of restriction under clause (d) of sub-section (5) of section 17 of the GST Act in respect of input tax credit on goods or services received by the applicant for construction of warehouse - HELD THAT:- The provisions of clauses (c) and (d) to sub-section (5) of section 17 of the GST Act thus clearly states that Input Tax Credit is not available in respect of works contract services or goods or services or both received for construction of an immovable property. Therefore, for the purpose of construction, the law is unambiguous in the main clauses (c) and (d) to sub-section (5) of section 17 of the GST Act that Input Tax Credit will not be available and thus it will be a blocked credit. It is only the Explanation part, where the law extends the ineligibility criteria for Input Tax Credit to the arena of re-construction, renovation, additions, alterations or repairs and that too conditionally, i.e. Input Tax Credit for such portion of the expenses pertaining to re-construction, renovation, additions, alterations or repairs which are capitalized stands ineligible. The issue of “capitalization” is applicable only in the Explanation part to the clauses (c) and (d) to sub-section (5) of section 17 of the GST Act i.e. only when the question of reconstruction, renovation, additions, alterations or repairs arises. If such expenses are not capitalised in the books, only under such circumstances the related Input Tax Credit may be available subject to fulfilment of other eligibility criteria. But for the purpose of “construction”, it is clear from the law that Input Tax Credit is blocked in all occasions and there is no scope of any other interpretation. The WBAAR has erred in interpreting the afore-stated provisions by applying the conditions of capitalisation both for construction as well as for reconstruction, renovation, additions or alterations or repairs. The concerned respondent has constructed one warehouse and let it out. This being a ‘construction’, will attract the provisions of the clauses (c) and (d) to sub-section (5) of section 17 of the GST Act and not the Explanation part for determining the eligibility criteria for Input Tax Credit. Thus, the input tax credit for such construction shall not be available to the respondent.
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