TMI Blog2022 (9) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... tail level. Under the earlier tax regime, credit of inputs was available for final product in respect of certain taxes/ duties only e.g. credit of duty of excise could not be utilised against VAT and vice versa. It can, therefore, be said that the GST is applicable only on value addition along the entire supply chain and thus cascading effect of taxes has been eliminated. Thus, under the GST regime, more input tax credit is available to tax payers along the entire supply chain as compared to the previous tax regime. Further, the transitional provisions under the CGST Act provide adequate credit of taxes accumulated under the erstwhile taxation regime to taxpayers in the GST regime - Section 17(5) (c) (d) of the CGST Act, 2017 prescribes denial of credit for certain class of taxpayers with certain conditions and limitations. This would mean that the legislature has decided in its wisdom the credit of taxes which would be allowed in credit as ITC and the tax that has not been allowed, as policy call of the Government, given effect through legislation, cannot be obtained through judicial review. This authority in IN RE: M/S. VARDHAN HOLIDAYS, [ 2021 (3) TMI 1380 - AUTHORITY FOR A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of works and deposited the same and the GST so deposited stands duly reflected in 2A/2B of the applicant. The applicant has already availed the ITC of GST paid by the contractor and is duly maintained in GST Credit Ledger, but no part of the same stands utilized till date. The availment of ITC on inward supplies of inputs/input services is concerned, the same is available in terms of Sub-section (1) of Section 16, which reads every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or service or both to him, which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person , but in terms of clause (c) of sub-section (5) of Section 17 of the GST Act,2017 and explanation appended to the same, ITC of the aforementioned service stands blocked. That even if it be so, the applicant has developed an infrastructure for being leased out against rental and the said rental is leviable to GST. Thus, the applicant is eligible to avail the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of inputs/ input services used for creation of such property which shall be leased out for rental, whereon GST is applicable. He also admitted that appeal against the said judgement has been admitted by the Hon'ble Supreme Court but no stay has been granted by the Apex Court for execution of the same and accordingly the decision of Hon'ble Odisha High Court was binding precedent as on date. 6.3 Ms. Preeti Manral, Deputy Commissioner and Sh. Deepak Biswal, Deputy Commissioner, SGST-Dehradun, Concerned Officers from the State Authority were also present during the hearing proceedings. Ms. Preeti Manral, Deputy Commissioner, presented the facts and submitted that Section (17) (5) (d) bars a taxable person, from taking input tax credit for construction of immovable property (as in the subject case) which is on his own account, even when such goods or services or both are used in the course or furtherance of business. The immovable property in the subject case is neither a plant nor machinery. Section 17 (5) (d) provides that no ITC is available in respect of any goods or services received by a taxable person for construction of an immovable property on his own accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; (d) 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 capitalization, to the said immovable property; iii) That, since in creation of infrastructure, all supplies required are actually plant and machineries, because the same is leased out for rental and that as per Industrial Policy of the Uttarakhand State, in case of Hotels, Subsidy has been allowed on Buildings etc. deeming the same as Plant Machinery. iv) That it is pertinent to mention that the term plant and machinery has been defined in GST as plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and oppressive and would be directly opposed to the basic rationale of GST itself, which is to prevent the cascading effect of multi-stage taxation and the inevitable increase in costs which would have to be borne by the consumer at the end of the day. c. Further, the Department has duly allowed ITC to a builder who sells building where completion certificate has not been issued at the time of sale (because the builder generates revenue which is subjected to GST), therefore ITC should not be denied to the applicant also because the applicant shall also be generating revenue which is subjected to GST, therefore denial of ITC to a person like the applicant is patently arbitrary and discriminatory. d. Further, denial of ITC by invoking Section 17(5)(c) or (d) of both CGST and SGST Act leads to double taxation, i.e., firstly additional payment of GST on the Inputs/Services consumed in the construction of the warehouse and secondly, on the rentals generated by the same warehouse. e. It is also a settled principle of interpretation of tax statutes that interpretation should be adopted which avoids or obviates double taxation. This principle is also directly applicable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be prescribed and in the manner specified in section 49, be 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 in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person . From the wording of Section 16 (1) of the CGST Act, 2017, we find that this section empowers the Central Government to impose conditions and restrictions on availing input tax credit and vide Section 17 of the CGST Act, 2017 such conditions and restrictions have been imposed. For ready reference relevant portion of Section 17 of the CGST Act, 2017, is reproduced hereunder: Section 17. Apportionment of credit and blocked credits.- (1) (2)... (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) . . (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can, therefore, be said that the GST is applicable only on value addition along the entire supply chain and thus cascading effect of taxes has been eliminated. Thus, under the GST regime, more input tax credit is available to tax payers along the entire supply chain as compared to the previous tax regime. Further, the transitional provisions under the CGST Act provide adequate credit of taxes accumulated under the erstwhile taxation regime to taxpayers in the GST regime. We observe that Section 17(5) (c) (d) of the CGST Act,2017 prescribes denial of credit for certain class of taxpayers with certain conditions and limitations. This would mean that the legislature has decided in its wisdom the credit of taxes which would be allowed in credit as ITC and the tax that has not been allowed, as policy call of the Government, given effect through legislation, cannot be obtained through judicial review. Few of the judicial pronouncements supporting the above stance are as under: i) In the judgment of JCB India Ltd. Vs. Union of India 2018-TIOL-23-HC-Mum-GST, the Hon'ble Court held- CENVAT credit is a mere concession and it cannot be claimed as a matter of right- credit on inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislative intent flows from the sovereign power given in the CGST Act, 2017 vide Section 16 (1) of the Act. As per said provision Input Tax Credit (ITC) is allowed to a registered person subject to such conditions and restrictions as the Government thinks proper, against the supply of goods or services received which are used or intended to be used in the course or furtherance of his business. Legislative intent is clear from aforesaid provision that if input supply of goods or services are received for furtherance of same business for which these supplies are received than only input tax credit can be allowed. The wordings of Section 16 (1) of the CGST Act, 2017 i.e. any supply of goods or services or both which are used or intended to be used in the course or furtherance of his business does not mean that any supply of goods or services received for the purpose of one business can be used for furtherance of another business. Further, Section 17 (5) (d) of the CGST Act, 2017 provides that no input tax credit shall be available in respect of goods or services or both received by a taxable person for construction of an immovable property (other than plant machinery). Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e binding on all Courts within the territory of India quite obviously refers to Courts other than this Court. The corresponding provision of the Government of India Act, 1935 also makes it clear that the Courts contemplated are the Subordinate Courts. ii) The Five Judges Constitution Bench of Hon ble Supreme Court in case of Central Board of Dawoodi Bohra Community v. State of Maharashtra (2005) SCC 673 observed that The law laid down by this Court in a decision delivered by a Bench of larger strength is binding on any subsequent Bench of lesser or co-equal strength . iii) The Hon'ble Apex Court in Megh Singh v. State of Punjab [AIR 2003 SC] one additional or different fact may make a world of difference between conclusi ons in two cases or between two accused in the same case. Each case depends on its own facts and a close similarity between one case and another is not enough because a single significant detail may alter the entire aspect. iv) The Hon'ble Supreme Court in the case of Hari Singh v. State of Haryana, reported in 1993 (66) E.L.T.23 (S.C.), held that, It is true that the system of the justice which is being administered by the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing goods and services to be used for construction of immovable property to be used in the course or furtherance of business. 13. We observe that Section 98(2) of the CGST Act, 2017 prescribes that (2) The Authority may, after examining the application and the records called for and after hearing the applicant or his authorised representative and the concerned officer or his authorised representative, by order, either admit or reject the application: Provided that the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act: 13.2 We are of the opinion that the above provision does not say that proceedings must be stayed by the higher court. The word used are 'pending' or 'decided' i.e. even if the issue is pending in any proceedings in the case of an applicant then the (supra), Authority shall not admit the application. In the case of Safari Retreats proceedings are pending before the Apex Court and in case of M/s Rosewood Hospitality (P) Ltd.; proceedings are pending before the Hon'ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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