ITC on Pre-Fabricated Structure Purchased and Not Constructed

[Narayan Pujar]

In one of the cases, the client has purchased an already existing pre-fabricated structure (HSN 9406) on an 'as is where is' basis, without undertaking any structural modifications.

As per Section 17(5)(d), input tax credit is restricted in respect of goods or services used for construction of an immovable property. While there are several rulings disallowing ITC on pre-engineered buildings (PEB), such disallowance has typically been on the basis that the PEB was used in the course of constructing an immovable property.

In the present case, can a distinction be drawn on the grounds that there is no construction activity involved, and the transaction pertains to the outright purchase of an already constructed and operational PEB? Accordingly, whether, in the absence of any construction activity, the restriction under Section 17(5)(d) would still apply and whether ITC can be availed in such circumstances?

AI Summary

Input tax credit on a purchased pre-fabricated structure turns on whether construction-related GST restrictions apply without any construction activity. Input tax credit under GST is questioned for the outright purchase of an already existing pre-fabricated structure sold on an 'as is where is' basis, where no structural modifications or construction activity are undertaken. The issue is whether the restriction in Section 17(5)(d), which applies to goods or services used in the construction of immovable property, also covers the purchase of a completed and operational pre-fabricated structure. The discussion focuses on the distinction between acquisition of an existing structure and construction activity for purposes of input tax credit eligibility.