Godowns built for commercial rental to registered dealers don't qualify for input tax credit under section 17(5)(d)

AAR held that no input tax credit is available on goods/services used for constructing godowns intended for commercial rental to registered dealers. The authority ruled that under section 17(5)(d) of GST Act, input tax credit on construction of immovable property for one's own account is restricted. The legislative scheme clearly prohibits such credit flow, and taxpayers must adhere to prescribed restrictions regardless of individual business requirements or suitability.

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Issues Involved:
The judgment involves issues related to the availability of Input Tax Credit (ITC) on inputs used for constructing godowns meant for commercial renting.

Summary:
The Authority for Advance Ruling, Tamil Nadu considered an application by a company seeking clarity on whether ITC is available on inputs used for constructing godowns intended for commercial renting to registered dealers. The company contended that since the godowns were constructed for business purposes, ITC should be allowed. However, the jurisdictional authorities cited Section 17(5)(d) of the CGST Act, which blocks ITC for goods or services used in constructing immovable property for one's own account. The company argued based on Article 14 of the Constitution of India, but the Authority held that the legislative scheme clearly restricts ITC in such cases, as per Section 17(5)(d). The ruling stated that no ITC is available on inputs for constructing godowns meant for commercial renting.

Key Findings:
- The company applied for an Advance Ruling on the availability of ITC for inputs used in constructing godowns for commercial renting.
- Section 17(5)(d) of the CGST Act blocks ITC for goods or services used in constructing immovable property for one's own account.
- The company's argument based on Article 14 of the Constitution was not accepted by the Authority.
- The ruling concluded that no ITC is available on inputs for constructing godowns meant for commercial renting to registered dealers.

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