BLOCKAGE OF ITC. DISTINCTION BETWEEN SECTION 17[5][c] & [d]

[Sadanand Bulbule]

Section 17 of the CGST Act provides for the blockage of ITC in respect of specified situations. Among them Section 17 [5] [c] & [d] relating to works contract are as under:

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

However there is persistent ambiguity for some taxpayers engaged in the works contract business as to the application sub-section 5[c] which speaks about “supply” and 5[d] speaks of “receipt” and the precise circumstances thereof.

Experts are requested to clear the doubt with illustrations in the larger interest of all visitors.

AI Summary

Blockage of input tax credit: distinguish works contract outward supply from inward construction receipts for own account, affecting ITC eligibility.
Section 17(5)(c) blocks ITC in respect of works contract services supplied for construction of immovable property (other than plant or machinery) but allows ITC when such works contract service is an input for further supply of works contract services; Section 17(5)(d) blocks ITC in respect of goods or services received for construction of immovable property on one's own account, including when such goods or services are used in the course or furtherance of business. The phrases "on his own account" and "including when such goods or services or both are used in the course or furtherance of business" are distinct and must be given their plain meaning.