TMI Blog2022 (2) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... to him which are used or intended to be used by him in the course or furtherance of his business. It is found that apart from conditions as laid down under Section 16 of the CGST Act, 2017; Section 17 provides for restrictions and factual position and situations where ITC would not be available. ITC restricted in case of construction undertaken on own account - HELD THAT:- 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. ITC restricted in case of works contract services only to the extent expenses are capitalized - HELD THAT:- 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 shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding located at C32, Sector-62, Noida, Gautam Buddha Nagar, Uttar Pradesh, 201301 at different floors, since the said property is further used for letting out to different tenants on rental basis viz. for furtherance of business? II. Whether ITC on construction of commercial complex located at Plot No. 18, BLOCK C, SECTOR -153, NOIDA, Gautam Buddha Nagar, Uttar Pradesh, 201310, will be available to Applicant in case the said building is used for the purpose renting out? 4. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. 5. The applicant have submitted statement of facts as under- (i) the applicant is having the principal place of business at C-32, Sector-62, Noida, Gautam Buddha Nagar, Uttar Pradesh, 201301 and having additional place of business located at Plot No. 18, BLOCK C, SECTOR -153, NOIDA, Gautam Buddha Nagar, Uttar Pradesh, 201310. (ii) the Applicant is currently carrying out activities such as renovation, alteration repair maintenance, fabrication, re- fabrication, furnishing, re-furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of input tax credit under Section 17 (5) of the CGST Act, 2017. (iv) The provision of Section 17(5) suggests that no input tax credit would be available in respect of (i.) works contract services received for construction of an immovable property and (ii.) goods and/or services received for construction of an immovable property. (v) the activity of letting out floors in the building amounts to supply of service under the CGST Act and the Applicant is liable to pay GST on the said rental amounts. (vi) the Applicant has paid Goods and services Tax ₹ 25,89,210 in respect of goods and services purchase/receive for carrying out the 'Civil and Interior Works' in different floors of the building. Since all the inward supplies which are received by the Applicant are taxable under the GST Law, so, a very huge amount of tax is to be discharged by the Applicant in the instant case. (vii) in view of Section 7 of CGST Act read with paragraph - 2(b) of Schedule II, the activity of the Applicant of letting out floors of the building to different tenants amounts to Supply within the meaning of CGST Act and the Applicant squarely comes within the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xiv) The Applicant is also planning to undertake construction of commercial complex in future and wishes to know the availability of input tax credit of the GST paid for the Construction of Commercial Complex' which will be used for the purpose of renting out. Since, the activity of the Applicant of constructing the commercial complex for the purpose of renting out amounts to Supply within the meaning of Section 7 read with paragraph 2(b) of Schedule II of CGST Act and the Applicant falls within the definition of Supplier as per Section 2(105) of the CGST Act and accordingly the Applicant is liable to pay GST on the rental amount received by him. (xv) When the Commercial complex is constructed for the purpose of renting out, in that event, the tax chain is not broken and on the contrary, the construction of the complex will result in a fresh stream of GST revenues to the Government Exchequer on the rentals income generated by the complex. Thus, it fulfills the definition of 'Business' as per GST law and hence the said service is in course or furtherance of business. (xvi) If the benefit of credit of input tax under Section 16 of the CGST Act is denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 17(5)(d). (ii) the applicant is getting building construction work done in own account which will be subsequently let out. As per Section 17(5)(d), input tax credit is blocked on goods or services or both received by a taxpayer person for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. 8. The applicant was granted a personal hearing on 06.12.2021 which was attended by Shri Niranjan Kumar Gupta and Ms. Medini Aggarwal, authorized representative. During personal hearing, they reiterated the submissions made in the application of advance ruling and requested to decide the case accordingly. DISCUSSION AND FINDING 9. At the outset, we would like to make it clear that the provisions of both the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation .- For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property; . Explanation.- For the purposes of this Chapter and Chapter VI, the expression plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- i. land, building or any other civil structures; ii. telecommunication towers; and iii. pipelines laid outside the factory premises. 15. According to Section 16 (1) of the CGST Act, 2017, every registered person is entitled 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 by him in the course or furtherance of his business. We find that apart from conditions as laid down under Section 16 of the CGST Act, 2017; Section 17 provides for restrictions and factual position and situations where ITC would not be available. 16. Pursuant to the aforesaid legal provisions, the following conclusions can be drawn: (1) ITC restricted in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property shall include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attached to the earth The effect of this explanation is that ITC on input of any goods or services including works contract service used towards construction of immovable property that is desired to be capitalized in the books of accounts shall not be admissible 17. We find that the applicant has placed reliance on the judgment of the Hon'ble High Court Orissa in the ease of M /s. Safari Retreats Pvt. Ltd., and another V/s Chief Commissioner of Central Goods Service Tax, Bhubaneswar others in WP (C) No. 20463 of 2018. In the said case, the party had constructed malls which were given further on lease. While holding that Section 17 (5) (d) was not ultra vires, the Hon'ble Court ruled that the party was eligible for credit. We find that the department has filed an appeal {SLP(C) No. 26696/2019} in against the said judgment of the Hon'ble Orissa High Court in Hon'ble Supreme Court, which is presently pending. The Hon'ble Supreme Court, in the case of Union of India V/s West Coast Paper Mills Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X
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