2019 (5) TMI 248 - AAR - GST

ITC Clarification: Limits on Construction Activities vs. Furniture Maintenance

In Re : M/s Rambagh Palace Hotels Pvt. Ltd.

The ruling clarifies that Input Tax Credit (ITC) is generally not available for construction-related activities involving immovable property to the extent ... Input tax credit - GST paid on building materials, such as cement, concrete, bricks, cement or marble or stone slabs or tiles, paint, polish and any other building materials meant for repair of building - GST paid on labour supply for carrying out repair of building - Works contract or not - HELD THAT:- The input tax credit in general is not available for construction, reconstruction, renovation, addition, alteration or repair of an immovable property even when such goods or services or both are used in course or furtherance of business. However, the limitation in such a scenario is extent of capitalization. The applicant is paying GST on building materials, such as cement, concrete, bricks, cement or marble or stone slabs or tiles, paint, polish etc and on some services such as labour supply. This activity of repair and maintenance which encompasses supply of goods for a construction activity is of immovable nature. The provisions of ITC for the said supply of goods is covered under Section 17(5)(d) read with explanation mentioned therein. Therefore, ITC on GST paid on such goods as mentioned above will not be available to the extent of capitalisation of the said goods as mentioned in Explanation of Section 17(5) of the CGST/RGST Act, 2017. The supply of goods and services supplied for construction work of an immovable nature can be done in composite manner also i.e. works contract. The works contract service for supply of above mentioned goods and service is covered under Section 17(5)(c) read with explanation mentioned therein. Therefore, ITC on GST paid on above said works contract service will not be available to the extent of capitalisation of the said goods as mentioned in Explanation of Section 17(5) of the CGST/RGST Act, 2017. Building Repair Work - GST paid on building materials, such as cement, concrete, bricks, cement or marble or stone slabs or tiles, paint, polish and any other building materials meant for repair of building - HELD THAT:- ITC will not be available to the extent of capitalization of building materials. Building Repair Work - GST paid on labour supply for carrying out repair of building shall be available for ITC, where material and supervision is provided by the applicant - HELD THAT:- ITC will not be available to the extent of capitalization of GST on labour supply. Building Repair Work - Will it make any difference if aforementioned works are carried out in a composite manner as a works contract, where material as well as labour is supplied by a contractor as a composite supply under works contract? - HELD THAT:- ITC will not be available to the extent of capitalization of building materials and service of labour supply. Repair Work relating to Electric Installation / Sanitary Fittings - GST paid on electrical fittings, such as Cables, Switches, NCB, and other electrical consumables meant for repair of existing electrical fittings - HELD THAT:- ITC will not be available to the extent of capitalization of electrical fittings. Repair Work relating to Electric Installation / Sanitary Fittings - sanitary fittings, such as tiles, commode, bath tub, wash basin, PVC pipes and other bath room sanitary fittings and consumables meant for repair of existing sanitary fittings - HELD THAT:- ITC will not be available to the extent of capitalization of sanitary fittings. Repair Work relating to Electric Installation / Sanitary Fittings - labour supply for carrying out repair of electrical installation and/ or sanitary fittings, where material and supervision is provided by the applicant - HELD THAT:- ITC will not be available to the extent of capitalization of service of labour supply. Repair Work relating to Electric Installation / Sanitary Fittings - Will it make any difference if aforementioned works are carried out in a composite manner as a works contract, where material as well as labour is supplied by a contractor as a composite supply under works contract? - HELD THAT:- ITC will not be available for works contract service to the extent of capitalization of supply of goods and services. Furniture & Fixture repairing work - wood, board, mica, tapestry, paint, polish and other consumables meant for repair of existing furniture & fixtures - HELD THAT:- ITC for GST paid on supply of above mentioned goods will be available in accordance with Section 16 of CGST/RGST Act, 2017. Furniture & Fixture repairing work - labour supply for carrying out repair of furniture & fixtures shall be available for ITC, where material and supervision is provided by the applicant - HELD THAT:- ITC will be available for service of labour supply in accordance with Section 16 of CGST/RGST Act, 2017. Furniture & Fixture repairing work - Will it make any difference if aforementioned works are carried out in a composite manner as a works contract for carrying out repair and maintenance job on movable furniture & fixtures such as, Sofa, Table, Chairs, Door, Cabinets, etc. where material as well as labour is supplied by a contractor as a composite supply under works contract - HELD THAT:- ITC will be available for GST paid on composite supply of goods (furniture & fixtures) and services (manpower supply) in accordance with Section 16 of CGST/RGST Act, 2017. Furniture & Fixture repairing work - whether input tax credit can be availed by the applicant of GST paid on purchase of new ready to use furniture such as chairs, etc, in terms of section 17 of the RGST Act, 2017? - HELD THAT:- ITC will be available for GST paid on purchase of new ready to use furnitures in accordance with Section 16 of CGST/RGST Act, 2017. Issues Involved:1. Building Repair Work2. Repair Work relating to Electric Installation / Sanitary Fittings3. Furniture & Fixture Repairing WorkIssue-Wise Detailed Analysis:1. Building Repair WorkQ1.1: The applicant sought to know if GST paid on building materials such as cement, concrete, bricks, marble, etc., used for building repair is available for ITC.Ruling: ITC will not be available to the extent of capitalization of building materials.Q1.2: The applicant queried whether GST paid on labor supply for building repair, where material and supervision are provided by the applicant, is available for ITC.Ruling: ITC will not be available to the extent of capitalization of GST on labor supply.Q1.3: The applicant asked if it makes a difference if the works are carried out as a composite supply under a works contract.Ruling: ITC will not be available to the extent of capitalization of building materials and labor supply services.2. Repair Work relating to Electric Installation / Sanitary FittingsQ2.1: The applicant questioned if GST paid on electrical fittings like cables, switches, NCB, etc., used for repairing existing electrical fittings, is available for ITC.Ruling: ITC will not be available to the extent of capitalization of electrical fittings.Q2.2: The applicant inquired whether GST paid on sanitary fittings such as tiles, commodes, bathtubs, etc., used for repairing existing sanitary fittings, is available for ITC.Ruling: ITC will not be available to the extent of capitalization of sanitary fittings.Q2.3: The applicant asked if GST paid on labor supply for repairing electrical installations and sanitary fittings, where material and supervision are provided by the applicant, is available for ITC.Ruling: ITC will not be available to the extent of capitalization of labor supply services.Q2.4: The applicant queried whether it makes a difference if the works are carried out as a composite supply under a works contract.Ruling: ITC will not be available for works contract services to the extent of capitalization of the supply of goods and services.3. Furniture & Fixture Repairing WorkQ3.1: The applicant sought to know if GST paid on materials like wood, board, mica, etc., used for repairing existing furniture and fixtures, is available for ITC.Ruling: ITC for GST paid on the supply of the mentioned goods will be available in accordance with Section 16 of the CGST/RGST Act, 2017.Q3.2: The applicant inquired whether GST paid on labor supply for repairing furniture and fixtures, where material and supervision are provided by the applicant, is available for ITC.Ruling: ITC will be available for labor supply services in accordance with Section 16 of the CGST/RGST Act, 2017.Q3.3: The applicant asked if it makes a difference if the works are carried out as a composite supply under a works contract for repairing movable furniture and fixtures.Ruling: ITC will be available for GST paid on composite supply of goods (furniture & fixtures) and services (manpower supply) in accordance with Section 16 of the CGST/RGST Act, 2017.Q3.4: The applicant questioned if ITC can be availed for GST paid on the purchase of new ready-to-use furniture such as chairs.Ruling: ITC will be available for GST paid on the purchase of new ready-to-use furniture in accordance with Section 16 of the CGST/RGST Act, 2017.Conclusion:The ruling clarifies that ITC is generally not available for construction-related activities involving immovable property to the extent of capitalization, as per Section 17(5) of the CGST/RGST Act, 2017. However, ITC is available for repairs and maintenance of movable furniture and fixtures, and for the purchase of new ready-to-use furniture, in accordance with Section 16 of the CGST/RGST Act, 2017.