TMI Blog2024 (2) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... x Credit to the arena of re-construction, renovation, additions, alterations or repairs and that too conditionally, i.e. Input Tax Credit for such portion of the expenses pertaining to re-construction, renovation, additions, alterations or repairs which are capitalized stands ineligible. The issue of capitalization is applicable only in the Explanation part to the clauses (c) and (d) to sub-section (5) of section 17 of the GST Act i.e. only when the question of reconstruction, renovation, additions, alterations or repairs arises. If such expenses are not capitalised in the books, only under such circumstances the related Input Tax Credit may be available subject to fulfilment of other eligibility criteria. But for the purpose of construction , it is clear from the law that Input Tax Credit is blocked in all occasions and there is no scope of any other interpretation. The WBAAR has erred in interpreting the afore-stated provisions by applying the conditions of capitalisation both for construction as well as for reconstruction, renovation, additions or alterations or repairs. The concerned respondent has constructed one warehouse and let it out. This being a construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 97 of the West Bengal Goods and Services Tax Act, 2017/ the Central Goods and Services Tax Act, 2017, (hereinafter collectively referred to as the GST Act ) on the issue of whether input tax credit (in brevity ITC ) against inward supply of said input/ input service used for construction of warehouse can be claimed and utilized to pay tax on the outward supply of services provided by way of renting of said warehouse in case such construction expenses are a) capitalized in books, and, b) not capitalized in books 4. The respondent taxpayer (i.e. applicant in WBAAR) contended before the WBAAR that as per provisions of clause (d) to sub-section (5) of section 17 of the GST Act, registered persons are ineligible for claiming ITC on inward supplies of goods or services used for construction on account of own use and such provisions will not extend to including construction of immovable property for use by lessee or tenant. 5. The respondent taxpayer (i.e. applicant in WBAAR) further contended that pre-engineered steel structures were used for construction of the warehouse and thus the said warehouse does not fall within the purview of immovable property. Hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e construction expenses are not capitalized in books, the claim of ITC is admissible. 8. The Appellant has filed the instant appeal against the above mentioned Advance Ruling dated 26.06.2023 on the following grounds: a) In the instant case, the respondent taxpayer had received inward supplies of goods and services both including works contract services to construct a warehouse/ godown and has let it out to M/ s Zomato Hyperpure Private Limited. The issue involved in the instant case is related to admissibility of credit of input tax charged on aforesaid supplies received by the respondent taxpayer. The WBAAR has erred by restricting the input tax credit to the extent of construction expenses only which are capitalised in books of accounts. b) Clause (d) of sub-section (5) of section 17 of the GST Act restricts input tax credit for construction of immovable property which deals with original construction. c) Further, explanation given under clause (d) of sub-section (5) of section 17 of the GST Act clarifies that construction work includes re-construction/renovation/ additions/ alterations / repairs and in these cases the availability of input tax credit is restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim ITC on non-capitalised construction/ reconstruction / renovation / additions / alterations / repairs expenses relating to godown / warehouse given on rent. 12. The State Revenue Authority also filed a written submission wherein they expressed their complete agreement with the order/ruling passed by the WBAAR. They also mentioned that the concerned taxpayer issued invoice for supply of services to M/s Zomato Hyperpure Pvt. Ltd. Mentioning SAC as 997212 (Rental or Leasing services involving own or leased non-residential property) under Real Estate Service (9972). By supplying real estate service, the applicant himself established the nature of such property is immovable one. So, revenue also echoed the view of WBAAR in this regard. 13. All the parties were duly heard and their submissions were carefully considered. In the instant case, the entire issue stands upon a very plain and simple reading of the provisions of clauses (c) and (d) to sub-section (5) of section 17 of the GST Act. 14. For the sake of clarity, the provisions of clauses (c) and (d) to sub-section (5) of section 17 of the GST Act is reproduced as below: Notwithstanding anything contained in subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the question of reconstruction, renovation, additions, alterations or repairs arises. If such expenses are not capitalised in the books, only under such circumstances the related Input Tax Credit may be available subject to fulfilment of other eligibility criteria. But for the purpose of construction , it is clear from the law that Input Tax Credit is blocked in all occasions and there is no scope of any other interpretation. 18. The WBAAR has erred in interpreting the afore-stated provisions by applying the conditions of capitalisation both for construction as well as for reconstruction, renovation, additions or alterations or repairs. 19. In view of above discussions, we are of the opinion that in the instant appeal case, the concerned respondent has constructed one warehouse and let it out. This being a construction , will attract the provisions of the clauses (c) and (d) to sub-section (5) of section 17 of the GST Act and not the Explanation part for determining the eligibility criteria for Input Tax Credit. Thus, the input tax credit for such construction shall not be available to the respondent. 20. The WBAAR Ruling No. 08/WBAAR/2023-24 dated 26.06.2023 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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