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2020 (8) TMI 103 - AAR - GSTInput Tax Credit - GST paid on payment of “lease premium charges (one-time charges) - land lease for business purpose - annual lease rentals”(recurring) towards supply of land on lease for business purpose - maintenance charges collected by the lessor - HELD THAT:- Sections 16 to 19 of the CGST Act, 2017 contain the provisions relating to allowance of Input Tax Credit subject to the conditions stipulated there under. Sec. 16(1) allows every registered person to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business subject to such conditions and restrictions as may be prescribed - Sec. 17(5) of the Act lists the circumstances wherein input tax credit in r/o goods/services shall not be available. It is pertinent to note that Section 17(5) starts with the phrase ‘notwithstanding anything contained in Section 16(1)’ which facilitates Sec. 17(5) to override the provisions of Sec. 16(1). Thus the pervasive domain of goods/services provided for under Sec. 16(1) was abridged by Sec 17(5)by specifying the situations wherein input tax credit in respect of certain goods/services has been restricted. It is not under dispute that the “lease premium charges”, “annual lease rentals” and “maintenance charges” are paid by the applicant to the lessor towards lease of land. It is manifest from the terms and conditions of the lease agreement dated 17.08.2017 that the applicant acquired land from M/s IKP Knowledge Park on lease for the purpose of construction of a building where their own laboratory would be accommodated. This is self evident from clause 5 of the agreement. It has been reported by the applicant that the lessor has paid GST on lease premium charges at the rate of 18% treating them as services. The applicant will also be required to pay GST on the “annual lease charges” and “maintenance charges” which are in the nature of services. All the referred services are received by applicant for construction of immovable property (other than plant & machinery) on their own account. The exclusion clause 17(5)(d) shows that the exclusion is applicable including when such services are used in the course or furtherance of business which is the claim of the applicant. Thus, the referred services in the instant case and in the given facts, squarely fall under the exclusion vide Sec. 17(5)(d) and hence ineligible to ITC. The impugned services referred by the applicant have been received for construction of immovable property on their own account and therefore input tax credit on those services is barred under the provisions of clause (d) of Sec. 17(5).
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