2022 (11) TMI 81 - AAAR - GST

Appeal dismissed for late filing despite COVID extensions on ITC eligibility for commercial rental complex works

The AAAR UP dismissed an appeal challenging an advance ruling regarding ITC on civil and interior works for a commercial complex used for rental purposes. ... Time limit for filing appeal under Section 100 of the CGST Act - Proviso to Section 100(2) - extension for sufficient cause - Manual filing alternative under Rule 107A of the CGST Rules - Effect of COVID 19 related extension of limitation by the Supreme Court - Restriction on input tax credit for works and goods/services for construction of immovable propertyTime limit for filing appeal under Section 100 of the CGST Act - Proviso to Section 100(2) - extension for sufficient cause - Manual filing alternative under Rule 107A of the CGST Rules - Effect of COVID 19 related extension of limitation by the Supreme Court - Admissibility of the appeal filed against Advance Ruling No. UP ADRG-90/2021 on the ground of limitation - HELD THAT: - The Appellate Authority examined the date of communication of the advance ruling as admitted by the appellant (served on 12.02.2022) and applied Section 100(2) which requires filing within thirty days from communication. The proviso to Section 100(2) permitting a further period of thirty days upon sufficient cause was considered. Rule 107A allowing manual filing was noted to be available throughout, and the appellant's inability to file electronically did not excuse delay because manual filing remained an option. The Supreme Court's COVID 19 related extension of limitation (providing a 90 day limitation from 01.03.2022 for matters where limitation expired between 15.03.2020 and 28.02.2022) was applied, resulting in the last permissible date for filing being 30.05.2022; even with the discretionary proviso allowance of 30 days the outer limit became 29.06.2022. The appeal was actually filed (and statutory fee completed) only on 07.07.2022. Given these dates and that the appellant conceded service on 12.02.2022 and had the option of manual filing, the Authority concluded the appeal was time barred and inadmissible, dismissing it on the ground of limitation without adjudicating the substantive ITC issues.Appeal dismissed as not admissible on the ground of limitation.Final Conclusion: The appeal against Advance Ruling No. UP ADRG-90/2021 is dismissed as time barred; the Appellate Authority did not examine the merits of entitlement to input tax credit. Issues Involved:1. Eligibility of input tax credit (ITC) for expenditure incurred on 'Civil and Interior Works' for a building used for letting out to tenants.2. Availability of ITC on the construction of a commercial complex intended for rental purposes.3. Procedural aspects and admissibility of the appeal filed by the appellant.Detailed Analysis:1. Eligibility of Input Tax Credit for 'Civil and Interior Works':The appellant, engaged in renovation and civil works for letting out buildings, sought an advance ruling on whether they could claim ITC for expenses incurred on 'Civil and Interior Works' in a building used for rental purposes. The Authority for Advance Ruling (AAR) ruled that the appellant is not eligible for ITC under clauses (c) and (d) of Section 17(5) of the CGST Act, 2017, which restricts ITC for works contract services and goods/services used for constructing immovable property.The appellant argued that the expenses incurred are for furtherance of business, as the property is rented out, generating taxable rental income. They emphasized that Section 16(1) of the CGST Act allows ITC for goods and services used in the course of business. They contended that the restriction under Section 17(5) should not apply as the property is not intended for sale but for rental, thus maintaining the supply chain and generating GST revenue.2. Availability of ITC on Construction of Commercial Complex:The appellant planned to construct a commercial complex for rental purposes and sought clarity on ITC eligibility for GST paid on construction expenses. They argued that renting out the complex qualifies as 'supply' under Section 7 read with Schedule II of the CGST Act, 2017, and thus, ITC should be allowed. They cited the Orissa High Court's decision in M/s Safari Retreats Private Limited, which supported ITC for construction expenses when the property is used for taxable rental income.The appellant highlighted that denying ITC would increase costs, which would be passed on to tenants, contradicting the GST's objective of free credit flow for business furtherance.3. Procedural Aspects and Admissibility of the Appeal:The appellant faced procedural issues in filing the appeal, as the AAR order was not uploaded on the GST portal, preventing timely electronic filing. They manually filed the appeal after confirmation from the authority. The appeal was filed late, and the statutory fee was paid on 07.07.2022, beyond the permissible extension period.The appellate authority examined the admissibility of the appeal under Section 100 of the CGST Act, 2017, which mandates a 30-day filing period from the communication date, extendable by another 30 days for sufficient cause. The order was communicated on 12.02.2022, making the last permissible filing date 29.06.2022. The appeal, filed on 07.07.2022, was deemed inadmissible due to the lapse of the extended period.Conclusion:The appeal was dismissed on procedural grounds without delving into the merits, as it was filed beyond the legally permissible period. The appellant's arguments on ITC eligibility for 'Civil and Interior Works' and construction of a commercial complex remain unaddressed due to the appeal's inadmissibility.