Hello,
Will ITC be available on construction of swimming pool in hotel or Water Park
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Hello,
Will ITC be available on construction of swimming pool in hotel or Water Park
In terms of Section 17[5][d] of the CGST Act, ITC on construction of swimming pool, being immovable property, is blocked. Hence not eligible to claim ITC.
Yes, Input Tax Credit (ITC) under GST is generally available on the construction of a swimming pool in a hotel or water park, subject to certain conditions. Here’s how ITC applies in such cases:
In conclusion, ITC on the construction of a swimming pool in a hotel or water park will be available, provided the pool is used for business purposes and generates taxable income. It’s important to ensure proper documentation and adherence to GST compliance rules when claiming ITC.
Dear Yagan Sir
May I request you to revisit your reply as regards to the availability of ITC on swimming pool in a hotel?
You are aware that, Section 17(5)(d) of the CGST Act has been retrospectively amended to nullify the Hon'ble Supreme Court judgement rendered in Safari Retreat case.
In view of the impact of this retrospective amendment, can a swimming pool form " plant and machinery”? If yes, can similar ratio be expanded to lifts, escalators, fire-fighting equipment, hotel buildings, malls, cinema halls, water parks and so on used in the course of business? Here the usage of such facilities in the furtherance of business and generation of taxable turnover is not a issue at all. Directly or indirectly, certainly they generate taxable turnover. The basic question is do such facilities form " plant and machinery" to qualify the entitlement of ITC on such facilities?
Kindly distinguish the legal position of Section 17(5)(d) before and after its retrospective amendment. Since this is a burning issue with huge financial ramifications, I have posted this in the larger interest of all stakeholders.
Your sagacious comments plz..
Dear Sir,
For your kind information.
The Hon’ble Supreme Court in the case of M/s. Safari Retreats P Ltd [2024 (10) TMI 286 - SUPREME COURT] while analyzing the expression plant or machinery, held that there could be a plant that is an immovable property; that the word ‘plant’ not having been defined under the Act, its ordinary meaning in commercial terms will have to be attached to it. The Hon’ble Court, thereafter laid down a functionality test, further concluding that if a building qualifies to be a plant, ITC can be availed against the supply of services in the form of renting or leasing the building or premises, provided the other terms and conditions of the CGST Act and Rules framed thereunder are fulfilled; that however, if the construction of a building by the recipient of service is for his own use, the chain will break, and ITC would not be available.
https://www.taxmanagementindia.comhttps://www.taxtmi.com/caselaws?id=759687
Regards,
YAGAY and SUN
Sir
My essential question is, whether immovable property in any form constitutes "plant and machinery" to be entitled to avail ITC on goods and services or both used in the construction of such property under Section 17[5][d]? It remains unanswered.
Consequent to the retrospective amendment to Section 17[5][d], the version of Safari Retreat case is demolished. And the department is determined not to accept the old version culminating in the fastening of tax liability as 'blocked credit'. So expensive litigation is assured, in case of any deviation.
Law keeps evolve.
Dear All,
Thanks for the reply
Post retrospective amendment of Plant or Machinery to Plant and Machinery, still we can rely on M/s. Safari Retreats P Ltd [2024 (10) TMI 286 - SUPREME COURT] Judgement ?
Also Plant and Machinery specifically excludes land, building or any civil structure so department might be reluctant on classifying swimming pool as part of building or civil structure ?
Post retrospective amendment of Plant or Machinery to Plant and Machinery, still we can rely on M/s. Safari Retreats P Ltd [2024 (10) TMI 286 - SUPREME COURT] Judgement ?
Reply : NO
Also Plant and Machinery specifically excludes land, building or any civil structure so department might be reluctant on classifying swimming pool as part of building or civil structure ?
Reply : Yes.
No room for any doubt is left, especially, in view of comprehensive and to the point reply posted by Sh.Sadanand Bulbule, Sir.
Dear Sirji
Your reply has removed all the dark clouds surrounding the burning issue. Hope this helps stakeholders to plan tax incidence carefully.
Dear Sirs,
I agree with the points raised by Sri Sadananda Bulbule Sir and the conclusion of Sri Kassturi Sethi Ji.