ITC ON OBTAINING COMPLETION CERTIFICATE

[Sadanand Bulbule]

Dear experts

Enrty No 5 of Second Schedule to the CGST Act reads us under:

Supply of services

The following shall be treated as supply of services, namely:-

(a) XXXX

(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

On conjoint reading of the above with explanation to Section 17[5][d], the crux of the issue that arises here is, if the part/full consideration is received prior to obtaining the Completion Certificate, but the apartments remain practically incomplete to occupy.  However the taxpayers continue the completion of such apartments even after obatining Completion Certificate, then is he entitled to utilise ITC on such balance works as well?

What would be your right advice to such taxpayers who are utilising ITC in such situation and also to the authorities who are allowing such ITC benefit?

Plz flash your validation.

AI Summary

Input tax credit eligibility depends on timing of consideration and whether post-completion works form a taxable works contract.
Whether ITC is claimable for inputs and services used in works carried out after issuance of a Completion Certificate depends on timing of receipt of consideration and the character of the post-certificate works: if entire consideration is received after the certificate the sale is outside GST and ITC is disallowed for subsequent works, whereas expenses attributable to units booked or taxable supplies prior to the certificate or post-certificate works that constitute an independent taxable works contract may remain eligible for ITC, subject to evidentiary proof and authority scrutiny.