TMI Blog2020 (9) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... for the applicant's business of letting out; that, Section 17(5)(d) renders ITC unavailable in respect of goods and services received for construction of immovable property(other than Plant and Machinery) on Taxpayer's own account, including when such goods or services or both are used in the course of furtherance of business. Hon'ble court in M/S. SAFARI RETREATS PRIVATE LIMITED AND ANOTHER VERSUS CHIEF COMMISSIONER OF CENTRAL GOODS SERVICE TAX OTHERS [ 2019 (5) TMI 1278 - ORISSA HIGH COURT] has concluded that they do not intend to hold it [the provision of Section 17(5)(d/] as ultra-vires (Para 20 of the Order). Thus it is clear that the Hon'ble High Court has provided a liberal construction and the same as such is not law, particularly as the Department has challenged the same in the Hon'ble Supreme Court. The Appellant has itself admitted that the Hon'ble Apex Court has issued the notice. Thus the case shall be listed for arguments - The department has filed an appeal against the said judgment of the Hon'ble Orissa High Court in CHIEF COMMISSIONER VERSUS SAFARI RETREATS PRIVATE LIMITED [ 2020 (3) TMI 1150 - SC ORDER] . The case is presently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit of GST in respect of inputs/ Capital Goods used or intended to be used for creation of covered logistics facility space (warehouse) to be rented out for storage purposes be eligible input tax credit under the provisions of Sections 16 and 17 of the CGST Act 2017? 2. Whether Input Tax Credit of GST in respect of inputs in form of goods and services be eligible if the goods and services are consumed and used in construction of covered logistic facility space when the said Input Tax Credit would be utilized in order to discharge and pay CGST and HGST/IGST on rent received from tenants of the warehouse. Ruling by Authority for Advance Ruling: The Authority pronounced the Ruling as under:- 1. The applicant is not eligible to input tax credit in respect of inputs/ capital goods used or intended to be used for creation of covered logistics facility space (warehouse) to be rented out for storage purposes. 2. Since no credit of input tax in respect of input goods or services consumed and used in the construction of covered logistics facility space is available, there arises no possibility of utilization of the same. II. GROUNDS OF APPEAL: The Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court's decision in Hussain bhai vs. Alath Factory Thejilali Union [(1978) 4 SCC 257] that an employer has economic control over workers' subsistence therefore they would be laid off if the employer ceases to use their services, in their case there being no alternative use of the warehousing facility these cannot be said to be constructed on the Appellant's 'own account'. 7. That, purpose of Section 17(5) is to restrict ITC where property is supplied post the issue of Completion Certificate as this supply doesn't attract GST. However for renting of immovable property the ITC shall be available. 8. Where an immovable property is constructed for leasing out the tax chain is not broken and the credit shall be available. 9. CBIC Circular 74/2018 dated 8.12.2018 states that credit shall be available where completion certificate has not been issued. That, it is so as the Building ceases to be 'goods' after issue of completion certificate. 10. Hon'ble Supreme court has held that where output is taxable the inputs and services are eligible for credit, in Eicher Motors Ltd. vs. UOI [(1999) 2 SCC 361]. Hon'ble Apex Court ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. There was no decision on the relevant issue of the jurisdictional High Court, in the Panipat Coop Sugar Mills case. Similarly there being no contrary decision of the jurisdictional High Court the decision by the Orrisa High Court is binding on the Advance Ruling Authority. 23. In Shalu Synthetics Pvt. Ltd. 2017 (346) ELT 413 (Tri.-Ahmd) it's been held that High Court decision are required to be preferred over larger bench decision of Tribunal. 24. Thus Authority has erred in not relying on the Orrisa High Court decision in Safari Retreats. 25. The Department has challenged this decision in Supreme Court vide an SLP and Hon'ble Apex Court has issued notice. 26. However no stay has been granted by Hon'ble Supreme Court. 27. That, Hon'ble Supreme Court has held in Kunhayammed and Others vs. State of Kerala [AIR 2000 SC 2587 (1) ] that a judgment continues to be binding unless an order staying or suspending the operation is issued. 28. In Sanyogita Rane 2013 (7) ALIMR 633 (Bom.) a judgment has been held to be effective where it is not stayed. 29. In Tata Motors Ltd. 2008 (56) BLJR 2903 it's been held that mere pendency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elines laid outside the factory premises. 4. That, the exclusion is when the Immovable Property is meant to be sold post issuance of a completion certificate since such levy does not attract GST; that since there is a break in the tax-chain and no GST would be payable the denial of ITC is justified; 5. In their case the property is not meant to be sold but is to be leased out on payment of GST; the denial of ITC would be arbitrary; 6. Para 5 of the Schedule-II to the CGST Act 2017 provides that construction of a building etc. intended for sale to a buyer before issuance of completion certificate is a supply of service; thus making the intention of the supplier a decisive factor. Accordingly a building intended for renting should also be entitled for admissibility of ITC otherwise the provisions shall be highly arbitrary; 7. The warehouse constructed for the purpose of letting out shall not come under the mischief of Section 17(5)(d); That the words, on his own account are not attracted in their case where immovable property is intended to be let out; 8. Hon'ble Odisha High Court decision dated 17 April 2019 in M/s. Safari Retreats Pvt. Ltd. v Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property is constructed on the taxpayer's own account, and is meant for furtherance of business. Hence there is clearly a break on the admissibility of ITC when an immovable property comes into existence; unless the same is constructed for a prospective buyer and element of construction service is involved. The Appellant has pleaded that the multilevel storage facility developed with fabricated sheets fixed on nuts and bolts are 'input' for warehouse building. That, since the property has been constructed strictly in accordance with the prospective lessee's requirements as ingrained in the terms of the agreement between the 2 parties, the same has not been constructed on their own account. That, thus, the restriction under Section 17(5)(d) doesn't come in the way of admissibility of the Input Tax Credit (ITC). In this regard Hon'ble Supreme Court of India has, in the case of UOI Vs. M/s. Ind Swift Laboratories [2011(265) ELT 3 (SC)] held, A taxing statute must be interpreted in the light what is clearly expressed In the instant case, the construction has been done by the Appellant for itself i.e. with all intentions to retain its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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