TaxTMI 
TaxTMI 
2020 (1) TMI 1597
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.... Ruling No. 12/2018/MP/AAR/R-28/39 dated 27.08.2018 1. BRIEF FACTS OF THE CASE 1. M/s. Jabalpur Entertainment Complexes Pvt. Ltd., Jabalpur, the appellant, has submitted that it is a private limited company operating a Mall and Multiplex in his building. The applicant is having a single GSTIN 23AABCJ6495J1ZA. The applicant is having following four operations in the company. (i). Multiplex (cinemas) - operating a 3 movie screen multiplex and snack bar under movie magic banner; (ii). Mall - applicant owns and operates the south avenue mall and has given space to several brands under rent revenue sharing basis, the applicant is also charging common area maintenance charges from tenants; (iii). Food court operates a food court in the mall which is an air conditioned area with self-serve (dine-in) and takeaway arrangements; (iv). SAM retail operates a franchise apparel retail store within the mall. 2. The appellant has stated before AAR (Authority for Advance Ruling) that he is charging GST on outward supply of goods and services as under: (i). Sale of movie tickets - @28% (on tickets exceeding Rs 100/- in value) or @18 % (on tickets....
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....f GST paid on works contract services received by the applicant for maintenance contract of building shall not be available to them in terms of clause (d) of section 17(5) of GST ACT, 2017. 4. QUESTIONS RAISED BEFORE THE APPELLATE AUTHOURITY FOR ADVANCE RULING (AAAR) The following questions have been posed before the authority with reference to the activity undertaken by the applicant: 1. Whether ITC on GST paid on goods purchased for the purpose of maintenance such as vitrified tiles, marbles, granite, ACP sheets, steel plates, TMT TOR, bricks, cement, paint, chemicals sanitary items like wash basin urinal pots and toilet accessories can be claimed in full; 2. Whether ITC on GST paid on works contract services received from registered and unregistered contractor of building can be claimed in full? 5. Written Submissions of the Appellant: At the outset, the appellant humbly wish to point out that the Authority for Advance Ruling has decided the question No. 3 in terms of clause (c) of Section 17(5) of GST Act, 2017, while in fact it should have been clause (d) of Section 17(5). Similarly, the Authority for Advance Ruling has decided the question No.....
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....under : Sec. 2 (19) : Capital goods means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business; 5. It is humbly submitted that the Authority for Advance Ruling has ignored the above definition of Capital goods given in Sec. 2(19), which is quite relevant for knowing the correct meaning of the expression "to the extent of capitalisation" used in the Explanation to Sec. 17(5). 6. It is humbly submitted that from the definition of Capital goods, the meaning of the expression "to the extent of capitalisation", is quite clear that if the cost of any renovation, alteration or repair of any immovable property (building in our case) is capitalised in the books of account, then it will not be eligible for Input tax credit, however it is also highlighted that the hon'ble High Court Orissa has in its judgment dated 17th April 2019 has even allowed ITC in Capitalization of Malls. As a corollary to above, if expenses pertaining to renovation, alteration or repair of any immovable property (building in our case) are not capitali....
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....hat as it may, the eligibility of ITC does not depend on the treatment given to the expenditure." It is our humble submission that above view of the Authority for Advance Ruling as mentioned in Para 7.5 of the impugned order is not at all correct. 11. For kind perusal of the Hon'ble appellate authority, we wish to refer here Para 5.3 of the impugned order which is pertaining to the opinion of the Jurisdictional CGST Commissionerate about eligibility for ITC in respect of inputs used in maintenance of building. "5.3 ............................ The Jurisdictional CGST Commissionerate has opined that the Applicant does not appear to be entitled to avail ITC on aforesaid items because it has been specifically mentioned in the conditions for non-admissibility of ITC in clause (c) and clause (d) of sub-section (5) of Section 17 of the Act. ............................ Thus, it is clear from clause (d) above, that no ITC shall be admissible to the Applicant in respect of goods or services or both received by a taxable person for construction / maintenance of an immovable property. In the instant case, the applicant has declared that they had ....
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....f ITC does not depend on the treatment given to the expenditure." is absolutely incorrect and is against the crystal clear provisions of law. 13. It is also a point for consideration that the basic objective of the provisions pertaining to Advance Ruling is not to check the compliance of provisions of the GST law by the registered person filing an application for advance ruling. Rather the basic purpose is to decide the issue referred by the applicant as per provisions of Sec. 97. It has nothing to do with the compliance of various provisions of GST Act & Rules by the registered person filing an application for advance ruling. This is evident from the provisions of Sec. 97(1) which says that - (1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application................ In view of above, if the applicant avails any Input tax credit contrary to the provisions of the GST Act & Rules, then he is liable for penal consequences. But, the Authority for Advance Ruling is not at all justified to state in Para 7.5 of its order that - 14. In support of our eligibility for ITC in respect of Inputs used for maintenance of building, we w....
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....s revenue expenditure. 17. It is also a point for consideration that ours is a company registered under Companies Act, and we have to mandatorily comply the Accounting Standards prescribed by the Institute of Chartered Accountants of India, and approved by the Ministry of Corporate Affairs. On that basis only the maintenance expenses are classified into capital or revenue expenditure. Moreover, normally most of the maintenance expenses are revenue expenditures, as they are of recurring nature, like replacement of broken or damaged tiles, wash basin, toilet seat, etc. These expenses cannot be classified as capital expenditure. 18. It is our humble submissions that all the above submissions are pertaining to the basic issue involved in this appeal that we are eligible for ITC on inputs used for maintenance of building, and which have not been capitalised. Therefore, none of our above submissions should be treated as additional ground. However, even if any of our above submissions is treated as additional ground, then we humbly seek the permission of the Hon'ble appellate authority to kindly admit the same for deciding our appeal on the point of eligibility of ITC o....
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....h 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. 3. Appellant in the first question wants to know whether ITC of GST which is paid as input tax on goods purchased for the purpose of maintenance such as vitrified tiles etc., can be claimed? The goods are being purchased by the appellant for the maintenance of building which is housing his Mall, Theatre, Food Court and a retail apparel store. This transaction falls under clause (d) which stipulates that goods or services or both received by a taxable person for construction of an immovable property on his own account would be ineligible for ITC claim. The word "construction" has been explained by explanation appended to clause (c) and clause (d). As per explanation construction includes "re-construction, renovation, additions or alterations or repairs". The word repair simply means "to restore (something damaged, faulty, or worn) to a good condition. We are sure that that goods purchased fo....