Input tax credit remains available for a works contractor supplying construction services to another recipient's project.

Section 17(5)(c) blocks input tax credit on inward works contract services used for construction of immovable property, except where those services are taken for further supply of works contract service, while section 17(5)(d) blocks credit on goods or services used for construction on one's own account. Those restrictions do not apply to a supplier making an outward supply of works contract service to another recipient's construction project. On that basis, input tax credit on inward supplies used for supplying works contract service to a municipal corporation is admissible.

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Issues: Whether input tax credit is admissible on inward supplies of goods and services used for supplying works contract service to a municipal corporation for construction of immovable property.

Analysis: Section 17(5)(c) blocks credit on inward supply of works contract service only when such service is used for construction of immovable property other than plant and machinery, except where the service itself is taken for further supply of works contract service. Section 17(5)(d) separately blocks credit on goods or services received for construction of immovable property on one's own account, including use in the course or furtherance of business. The prohibition in these clauses operates in relation to inward supplies claimed as credit, and does not extend to a supplier who is making an outward supply of works contract service to another person. The applicant was supplying works contract service to Kolkata Municipal Corporation and was not constructing the immovable property on his own account.

Conclusion: Input tax credit on the inward supplies used for supplying works contract service to Kolkata Municipal Corporation is admissible.

Final Conclusion: The ruling recognises that the blocking provisions in section 17(5) do not deny credit to a works contractor making an outward supply of works contract service for another recipient's construction project.

Ratio Decidendi: Section 17(5)(c) disallows credit only on inward works contract service used for construction of immovable property, except for further supply of works contract service, while section 17(5)(d) applies to other inputs and input services used for own-account construction; a supplier making outward works contract service for another recipient is not barred from input tax credit on that basis.

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