ITC on material issued to Contractor

[SUSHANTA MISHRA]

M/s ABC Hydro Ltd is engaged in the business of generation of Electricity. It has four hydro electric project in the state of Himachal Pradesh. The company has started construction of a new hydro electric project in the state of HP. The company has awarded a contract for construction of dam to M/s X Ltd. As per terms of contract M/s ABC (contractee) shall supply Cement and Steel to M/s X, (contractor) on recoverable basis to maintain quality . Accordingly M/s ABC Ltd purchased Cement and Steel from manufacturer with GST paid invoices and issued the materials (cement and steel) to M/s X by raising GST invoice. Whether M/s ABC can claim ITC? Will it not covered under Block credit under Sec 17(5)(d) as the inputs are used for works account for own use? May please clarify.

AI Summary

ABC Hydro Can Claim Input Tax Credit on Cement and Steel Supplied to Contractor Under GST Section 17(5)(d) M/s ABC Hydro Ltd, involved in electricity generation, has contracted M/s X Ltd for constructing a dam in Himachal Pradesh. M/s ABC supplies cement and steel to M/s X on a recoverable basis, purchasing these materials with GST paid invoices and issuing them to M/s X with a GST invoice. The query is whether M/s ABC can claim Input Tax Credit (ITC) on these materials, considering potential restrictions under Section 17(5)(d) of the GST Act. Responses indicate that M/s ABC can claim ITC as the transaction is considered trading, and M/s X could have independently purchased the materials.