2020 (3) TMI 297 - AAR - GST

Authority rules on input tax credit eligibility for leasing works contract services under GST laws, emphasizing compliance and accuracy.

In Re: Smt. Kamalavadani Udayakumar

The Authority ruled to dispose of the application as withdrawn, clarifying the issue of input tax credit eligibility on works contract services for ... Permission for withdrawal of Advance Ruling application - input tax credit on works contract services - output service is not for the purpose of sale but leasing out - HELD THAT:- The applicant sought the permission of the Hon’ble authority for Advance Ruling to withdraw her application. The application filed by the Applicant seeking Advance Ruling is disposed as withdrawn. Issues:- Whether input tax credit can be claimed on works contract services when the output service is not for the purpose of sale but leasing outRs.Analysis:The applicant sought an advance ruling on the eligibility of claiming input tax credit on works contract services when the output service is for leasing out commercial buildings. The applicant argued that Section 16(1) of the CGST Act allows credit on inputs used for business purposes without reference to Section 17(5), which artificially disallows certain credits. Citing the Orissa High Court judgment in Safari Retreats case, the applicant contended that such restrictions are against the spirit of GST laws. The applicant also referred to past decisions and circulars to support their claim that input tax credit should be allowed in this scenario.The applicant was given an opportunity for a personal hearing, but due to an insufficient address issue, the hearing was postponed. The State Tax officer submitted comments stating that leasing is a taxable service attracting GST, and input tax credit eligibility depends on the applicant being a registered taxable person filing regular returns. Further verification revealed discrepancies in the applicant's provided address, raising doubts about the authenticity of the application.Subsequently, the applicant, after reviewing a previous ruling by the Authority, requested to withdraw the application based on similarities with the referenced case. Considering the facts and the applicant's request, the Authority ruled to dispose of the application as withdrawn.This judgment clarifies the issue of input tax credit eligibility on works contract services for leasing purposes under GST laws. The ruling emphasizes the importance of accurate information and compliance with registration requirements for claiming such credits. The decision also highlights the significance of previous judgments and legal interpretations in shaping advance rulings on complex GST matters.