2023 (3) TMI 1319 - AAR - GST

AAR rejects application for advance ruling on ITC availability for construction contractor GST charges due to vague details

The AAR Rajasthan rejected an application seeking advance ruling on availability of ITC for GST charged by construction contractors for factory building ... Scope of Advance Ruling - Availability of ITC - GST charged by the hired work contractors against construction, of factory building including foundation of machinery, rooms for chiller, generators, transformers and erection of electric poles, lying of internal roads, factory building, internal drainage, storage tank, laboratories etc on the construction services with or without material is available to them or not - Section 17(5) of GST Act 2017 - HELD THAT:- Availment of ITC on services depends so many factors viz type and nature of services, condition of services supplied etc. Availment of ITC without specific details cannot be generalized and ruling cannot be given in absence of particular services. s per Section 95 of CGST Act, 2017; this authority shall decide on matters or on questions specified in sub-section (2) of Section 97, and “Authority” means the Authority for Advance Ruling, constituted under Section 96 - the question on which advance ruling is sought is vague in nature. Applicant is going for setting up a plant and without knowing the nature of construction categorically; it's not possible to give ruling unless and until details are not provided. Applicant has not provided the details as asked to his authorized representative during PH. The subject application for advance ruling made by the applicant is not maintainable and hereby rejected under the provisions of the GST Act, 2017. Issues:1. Interpretation of GST input tax credit availability on construction services for setting up a factory. Analysis:1. The applicant, a registered person, sought an advance ruling on the availability of input tax credit (ITC) of GST charged by hired work contractors for construction services related to setting up a fuel ethanol plant. 2. The applicant submitted that the construction expenses, including foundation of machinery, rooms, electric poles, internal roads, drainage, etc., fall under Section 17(5) of the GST Act, making them eligible for ITC. 3. During the personal hearing, the applicant's authorized representative reiterated the construction details and requested clarification on ITC eligibility. However, specific details were not provided, leading to a lack of clarity for the authority. 4. The jurisdictional officer's comments supported the availability of ITC on construction expenses related to plant and machinery fixed to earth, as clarified under Section 17 of the Act. 5. The authority analyzed the facts, submissions, and relevant provisions of the GST Act, highlighting the need for clear details to determine ITC eligibility for construction services. 6. Despite the applicant's intent to set up a plant, the vague nature of the query and lack of specific construction details hindered the ruling process. 7. Due to insufficient information provided by the applicant and the inability to ascertain ITC eligibility without clear construction specifics, the authority ruled the application as not maintainable under the GST Act, 2017.Conclusion:The application for advance ruling regarding the availability of input tax credit on construction services for setting up a factory was deemed not maintainable and rejected under the provisions of the GST Act, 2017.