TMI Blog2021 (12) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to the provisions of Sec. 17(5) read with the explanation to it, credit of civil structure is covered under blocked credit. Clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property As such, input tax credit (ITC) of GST paid in relation to building or any other civil structure is not available. The Input Tax Credit of Tax paid on cost proposed to be incurred in relation to activity mentioned is not admissible. - UP ADRG 80/2021 - - - Dated:- 28-6-2021 - SHRI ABHISHEK CHAUHAN AND SHRI VIVEK ARYA, MEMBER Represented by: Mr. Shobhit Goel (Advocate.) ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 UNDER SECTION 98 (4) OF THE UPGST ACT, 2017 1. M/s TIANYIN WORLDTECH INDIA PRIVATE LIMITED, D-225, GF FF, Sector-63, Noida -201301 (here in after referred to as the applicant) is a registered assessee under GST having GSTN: 09AAFCT4154Q1ZO. 2. The applicant has sought advance ruling on following question- (1) The Applicant has approached the authority of advance ruling to determine the admissibility of Input Tax Credit of Tax paid on cost proposed to be incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction floor to be used in the case of emergency Operation. Telephone System (Including Wiring) 1. Intercom and external communication systems is a basic necessity to facilitate communication within and outside the factory premises. LAN System 1. LAN connectivity of computers on production floor with main server used for configuring commands for operation of machine. Fire Alarm System 1. Fire Alarm system of Production floor. Dismantling Work Demolishing of irrelevant area. 3. Air Condition Work Air-Conditioning Equipment's 1. Heating, ventilation and air conditioning equipment on the production floor is required to adhere to cleanroom environment conditions. Air-Conditioning Piping work Accessories Ventilation Fans Air-Distribution System Automatic Control System Dismantling Work 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here it is an input service for further supply of works contract service; (v) Section 17(5)(d) says that goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation - For the purposes of clauses (c) and (d), the expression construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; (vi) On perusal of the above provisions it is clear that ITC on works contract is available if such service is to be used for plant and machinery. (vii) Plant and Machinery in certain cases when affixed permanently to the earth would constitute immovable property. When a works contract is for the construction of plant and machinery, the ITC of the tax paid to the works contractor would be available to the recipient, whatever is the business of the recipient. This is because works contract in respect of plant and machinery comes within the exclusion clause of the negative list and ITC would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / UPGST Act would be mentioned as being under the CGST Act'. 9. We have gone through the submissions made by the applicant and have examined the explanation submitted by them. At the outset, we find that the issue raised in the application is squarely covered under Section 97(2)(a) of the CGST Act 2017 being a matter related to classification of goods. We therefore, admit the application for consideration on merits. 10. We observe that the applicant has sought advance ruling on the issue- (1) The Applicant has approached the authority of advance ruling to determine the admissibility of Input Tax Credit of Tax paid on cost proposed to be incurred in relation to activity mentioned in the Annexure. 11. We find that applicant is engaged in the manufacturing of Charger of Mobile Phone its Parts or Sub-Parts. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961.), the input tax credit on the said tax comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as laid down under Section 16 of the CGST Act, 201 7; Section 17 provides for restrictions and factual position and situations where ITC would not be available. 15. Pursuant to the aforesaid legal provisions, the following conclusions can be drawn: (1) ITC restricted in case of construction undertaken on own account Clause (d) restricts input tax credit of goods and services used by a person for construction of an immovable property (except plant and machinery) on his own account. Thus, if a person purchases construction material and engages a labor contractor to provide the constructions services using the purchased material, ITC shall not be available of both the goods purchased and the services of the labor contractor procured; (2). ITC restricted in case of works contract services only to the extent expenses are capitalized Clause (c) and clause (d) use the word 'construction' and as per the Explanation to clause (c) and clause (d) construction is only to the extent of capitalization . Consequently, ITC of any expenditure related to construction that is capitalized in the books of accounts shall be blocked. This shall not only cover the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , utility of different items on which admissibility of input tax credit has been sought. We proceed to examine one by one. 17. The first Major head mentioned at Sl. No. 1 is Building Work wherein ITC availability on (1) Cement, iron, dust, sand, bricks, bonding chemicals, concrete used in building for construction and repairing of production floors (2) labour contractor payment (used in making of production area) (3) Painting of building (4) False sealing and lights (5) Wire Fitting on Production Floor (6) Furniture Fixture for Production Floor (7) Furniture Fixture for office and (8) Tiles used in production area have been sought by the applicant. According to the provisions of Sec. 17(5) read with the explanation to it, credit of civil structure is covered under blocked credit. Clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property As such, input tax credit (ITC) of GST paid in relation to building or any other civil structure is not available. 18. The next Major head mentioned at SI. No. 2 is Electrical Work wherein ITC availability on Sub-Station Work, DG Set Powe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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