TMI Blog2023 (12) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act i.e. admissibility of input tax credit. Moreover, the provisions of the Section 17(2) of the Act, read with the Rule 43(1) (a) of the CGST/TNGST Rules, 2017 (hereinafter referred to Rules) disentitles the ITC in this case on the Solar Power Panels used for installation of the Solar Power Plant which were used by the Appellant for supply of Electric Energy which is exempted from the whole of the GST payable under the Notification No: 2/20217 CT(R) dated: 28.06.2017 (Sl.No: 104). When Electricity energy manufactured using the Solar Panels were supplied to TANGEDCO which involves no payment of GST, the supply chain get snapped at the point and the inputs or capital goods used for such supply would not be eligible for any input tax credit. The further purchase of electricity from TANGEDCO at a different location is altogether a different supply and the fact that the billing is done by TANGEDCO in a consolidated matter does not alter the position. - the tax paid on the inputs i.e. Solar Panels are not eligible for input tax credit as the same are used exclusively for supply of exempted goods in view of the provisions of Section 17(2) of the CGST Act, 2017 read with Rule 43( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions under the Tamil Nadu Goods and Service Tax Act, 2017. 2. The subject appeal was filed under Section 100(1) of the Tamilnadu Goods Services Tax Act 2017/Central Goods Services Tax Act 2017 (hereinafter referred to the Act ) by M/s VBC ASSOCIATES (hereinafter referred to as Appellant ). The Appellant was registered under the GST Act vide GSTIN 33AAFFV9173N1ZI. The appeal was filed against the Order No. 33/AAR/2022 dated: 31.08.2022 passed by the Tamil Nadu State Authority for Advance Ruling (hereinafter referred to AAR)on the Application for Advance Ruling filed by the Appellant. 2.1 The Appellant has stated to be a Partnership Firm in the business of maintenance of an immovable property located in T Nagar, Chennai. The said property is also the principal place of business of the Appellant, as the said maintenance services for the immovable property is being provided from that premises. The Appellant had filed an application before the Hon ble Authority for Advance Ruling, seeking clarification on the following question:- Whether the input tax credit on solar power panels procured and installed is blocked credit under Section 17(5) (c) and (d) of CGST/ T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legally separate as per taxation law, as per Civil law Partnership Firm will not exist without the Partners. 5.4 In response to the query, whether electricity charges were paid by the Appellant Firm or by the Tenants, AR stated that electricity charges were being paid by the Appellant and then recovered from the Tenants. 5.5. AR was asked to state whether the Renting of Immovable Property service turnover of the property owners (Lessors) was included in the turnover of the Appellant Firm, it was stated that the turnover of renting activity is not included in the turnover of the Appellate partnership firm. 5.6. When AR was asked to explain with regard to the recital in the Lease Deed between Owners (Lessor) and Tenants, vesting obligation on Lessor for adequate power supply to Tenants, whereas the Appellant had paid and recovered electricity charges from the Tenants. The AR had not responded to this query. 5.7. AR requested for three days time to submit copies of invoices issued for other services provided by Appellant to Tenants, additional submissions, if any. AR was advised to submit additional written submissions, if any, along with copies of the invoices, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been emailed to your office on this subject. The Electricity charges are billed by TNEB to the partnership firm. Evidence in this regard has already been submitted. The value / rate charged by TNEB is different from that charged by Partnership firm on tenant. This is a part of an overall operation maintenance service of the building under consolidated agreement. Renting of immovable property service and separately, operation maintenance services are being provided to occupants. Renting services are assessed in hands of individual partners and operation maintenance services are assessed in hands of partnership firm. There are combined services availed to the occupants. Lessors are obligated to provide the premises along with the power supply, the TNEB has issued the power sanction to VBC partnership firm the wheeling agreement is also with VBC partnership firm. Consequently the Lessors through the instrumentality of partnership firm (civil law sense) have rendered a composite services and hence liable to tax as a combined service. Hence the recitals are duly explained. The above submission on output taxability are once again reiterated that they are wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 17(2) of the CGST /TNGST Act read with Rule 43(1)(a) of CGST /TNGST Rules 2017. 7.6. In order to appreciate the order passed by the AAR, it is relevant to examine the provisions of the Section 97(2) of the CGST/TNSGST Act, 2017 (Act) which envisages the specific aspects/subjects in respect of which questions seeking Advance Ruling could be raised before the AAR. We find that the only aspect relevant to the subject matter is the clause (d) of the Sec. 97(2) of the Act i.e: admissibility of input tax credit of the tax paid or deemed to have been paid . The said provision does not provide for examination about the inadmissibility of Input Tax Credit under a particular subsection of the provisions of the Act relating to Input Tax Credit. It is important to note that while a particular sub-section of the Act may or may not allow/disallow the Input Tax Credit (ITC) in relation to a specific supply, there may be other provisions of the Act where Input Tax credit may be inadmissible for a given input supply. The question of blocking of credit (ITC shall not be available) arises in case the ITC is otherwise admissible, as per other provisions of the Sec. 16 and 17 of the Act. But the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f WCS. But, in the instant case, M/s. VBC associates, the appellant (the taxable person), raised the issue regarding blocking of ITC on solar power panels, in view of their outward supply of maintenance of Immovable property service. As the Sec. 17(5)(c) of the CGST Act, 2017 deals with the blocking of the credit on works contract service (input service) that too, for construction of immovable property; and since the issue raised is with regard to the ITC on Solar Power Panels, but not with regard to WCS (input service), there is no relevance of the said provision of the Sec. 17(5)(c) to the facts of this case. But this does not mean that ITC is not blocked. As already mentioned above, the non-applicability of the provisions of the Sec. 17(5)(c) does not mean that the ITC is admissible, since in the instant case, the ITC ab initio, is not admissible under Sec. 17(2) of the Act. 8.2 Further, the provisions of the Sec. 17(5) (d) are also not attracted in this case as it envisages that ITC is not available on goods or services or both (being inputs) received by a taxable person Tor construction of immovable property .... As in the instant case the Appellant is not involved in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and given below:- Now this Lease Deed witnesseth and it is hereby agreed by and between the parties hereto as under: 14. Power Supply: The Lessors have provided adequate power supply to the building on the Schedule A property. ..The Lessee shall pay all the electricity consumption charges in respect of the electricity consumed by them to the TNEB during the lease period on or before the respective due dates. 15. Generator (Power Backup 100%) Lessors have provided the Demised premises with 100% power backup of 500KVA x 2 nos for the Scheduled A property. However, running, repair and maintenance thereof shall be borne by the Lessee.... 10.1 Further, as per the Maintenance Agreement dated 27.09.2020, between the Appellant (First party/Lessor) and the tenant, M/s Nissan (Second Party/Lessee), the Appellant has only to provide various maintenance services including the upkeep of the generator which provides power back-up. The relevant portions of the Maintenance Agreement are extracted hereunder:- 6. Electricity and Water charges: The First Party shall pay upfront, common electricity charges and metered water charges or tanker lorry water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctricity Board concerned (i.e. TANGEDCO) is exempted in terms of CGST Notification No. 2/2017-Central Tax (Rate) dated 28-6-2017 (Serial no. 104). Also, the electricity energy purchased by them from the Electricity Board concerned at the Principal Place of Business at Chennai goods are exempted. Consequently, the tax paid on the inputs namely, Solar Panels are not eligible for input tax credit as the same are used exclusively for supply of exempted goods (i.e. Electrical energy supplied by them to TANGEDCO and purchased back from them is an exempted item) in view of the provisions of Section 17(2) of the CGST Act, 2017 read with Rule 43(l)(a) of the CGST Rules, 2017. The fact that the Appellant has passed the electricity charges to the client under a separate invoice, as part of the composite service of Maintenance, with tax component does not vitiate this position. 10.5 It is our considered opinion that when Electricity energy manufactured using the Solar Panels were supplied to TANGEDCO which involves no payment of GST, the supply chain get snapped at the point and the inputs or capital goods used for such supply would not be eligible for any input tax credit. The further purc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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