TaxTMI 
TaxTMI 
2020 (1) TMI 662
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....ct". • The issue raised by M/s. Indag Rubber Limited, SP 86-88, Industrial Area Bhiwadi, Alwar, Rajasthan 301019 (hereinafter called as "the applicant") is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2)(d) given as under: d. admissibility of input tax credit of tax paid or deemed to have been paid; • Further, the applicant being a registered person (GSTIN is 08AAAC10868D1ZS as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT: • The applicant is incorporated under the Companies Act, 1956 bearing CIN L74899DL1978PLC009038 and has its registered office at 11 Community Centre, Saket, New Delhi - 110017. The Applicant also has its office in Rajasthan from where it undertakes its business operations. Accordingly, it is registered in Rajasthan and falls within the jurisdiction of Bhiwadi, Distt. Alwar, Rajasthan. Its GSTIN in Rajasthan is 08AAAC10868DIZS an....
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.... undertaking work with respect to point no. iii. to vi. In respect of these inputs and inputs services input tax credit is being availed by the Applicant. • The Applicant has entered into agreement with M/s. Akanksha Contracts Pvt. Ltd. (hereinafter referred to as the "Agreement 1") for supplying various goods and services for setting up the MRO facility on the Industrial Land. Copy of the Agreement 1 is enclosed herein as Annexure-A. • The Applicant issues purchase order on M/s. Akanksha Contracts Pvt. Ltd for supplying the goods and services for setting up of MRO facility. Copy of the sample purchase orders issued by the Applicant is enclosed herein as Annexure-B. • The goods are procured by M/s. Akanksha Contracts Pvt. Ltd on a bill to ship to basis. In the invoice issued by the supplier, the bill to party is M/s. Akanksha Contracts Pvt. Ltd. and ship to party is the Applicant. A copy of sample invoices is enclosed as Annexure-C. • Against the material receipts, the Applicant has paid Rs. 97.37 lacs amount in advance for procuring of goods and services. Further, it has been agreed that M/s. Akanksha Contracts Pvt. will raise a ....
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....ods and Services Tax Act; the tax payable under the provisions of subsection (3) and sub-section (4) of Section 9 of the respective State Goods and Services Tax Act; or the tax payable under the provisions of sub-section (3) and sub-section (4) of Section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy." • Section 16 of the GST Act provides for the eligibility and conditions for taking input tax credit. Relevant portion of this provision is extracted as following: "Section 16 (1) - Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless-- ....
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.... (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. • Section 16 (1) of the CGST Act specifically provides that every registered person shall be entitled to take credit of the input tax charged on any supply of goods or services or both made to him, which are used or intended to be used in the course or furtherance of his business. Such entitlement is subject to fulfillment of certain conditions such as possession of invoice, receipt of goods/ service, payment of tax to Government etc. It can be seen that one of the objective behind introduction of GST viz. seamless flow of credit is being fulfilled with Section 16(1) of the CGST Act. The major intent behind GST is that wherever, the supplier is engaged in providing taxable supply, it should be given credit of the inputs and input services used by it for providing the said supply. • As mentioned earlier, the eligibility of credit is subject to fulfillment of conditions under Section 16(2) of the CGST Act. In the instant case, the Applicant before availing the credit will be fulfilling all the conditions such as receipt of tax invoice, receipt of good....
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.... tax charged by M/S Akanksha Contracts Pvt. while providing the goods and services by virtue of Section 16(1), on fulfillment of conditions enunciated under Section 16(2) of the CGST Act. • In this regard reliance is placed on the case of M/s. Safari Retreats Private Limited and Another vs. Chief Commissioner of Central Goods & Service Tax & Others, 2019 (5) TMI 1278, Orissa High Court, wherein the credit has been allowed on goods and services procured for the construction of shopping malls and then letting out the same. • In that view of the matter, in our considered opinion the provision of Section 17(5)(d) is to be read down and the narrow restriction as imposed, reading of the provision by the Department, is not required to be accepted, inasmuch as keeping in mind the language used in (1999) 2 SCC 361 = 1999 (1) TMI 34 - SUPREME COURT (supra), the very purpose of the credit is to give benefit to the assessee. In that view of the matter, if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay under Section 17(5)(d) of ....
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....ed. In the light of aforementioned submissions, it is submitted that in the view of the Applicant, the restriction under Section 17(5) (d) of the CGST Act is not applicable in cases where the inputs and input services are used for making a taxable output supply. 2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT Whether the applicant is eligible to claim credit of the GST charged by vendor at the time of supply of goods and services to it, which are used for carrying out the following activities for setting up of MRO facility which will be rented out: a. Civil Work b. External Developmental Works 3. PERSONAL HEARING In the matter, personal hearing was granted to the applicant on 27.09.2019 at Room no. 2.29 NCRB, Statue Circle, Jaipur. The applicant vide letter dated 26.09.2019 requested for adjournment of PH. Accordingly second PH was granted on 10.10.2019. Mrs. Disha Jain, Advocate, authorized representative of the applicant appeared on personal hearing and she reiterated the submissions already made in the application and submitted a compilation of brief facts of case and interpretation. She further requested that the case may be decided at the ea....
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....earth. In view of the facts as mentioned above and provisions under GST Act, we find that the activity of MRO involving supply of goods and services is leading to creation of an immovable property. • Section 2(59) of the GST Act provides for the definition of 'inputs' as following: "means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business." • Section 2(60) of the GST Act defines "input service" as following: "means any service used or intended to be used by a supplier in the course or furtherance of business." • Section 2(62) of the GST Act defines "input tax" as following: "in relation to a registered person, mean the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes: the integrated goods and services tax charged on import of goods; the tax payable under the provisions of sub-sections (3) and (4) of Section 9; the tax payable under the provisions of sub-section (3) and (4) of Section 5 of the Integrated Goods and Services Tax Act; the tax payable under ....
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....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. Explanation -For the purposes of clauses (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; In view of the provisions as mentioned under Section 17(5)(d) of GST Act, we find that ITC is not available for construction of an immovable property even when such goods or services or both are used in course or furtherance of business. The applicant's claim that Section 17 (5) (d) deals with unavailability of credit of inputs/ input services in case where the output is not taxable is only one dimension of the law. This is an implicit interpretation which is not the intentional outcome of the said section. The purposive dimension of the said section is blocking of credit for construction of immovable property. It is clear while go....