TaxTMI 
TaxTMI 
2022 (9) TMI 198
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....ics, 271 KA, PO- Harrawala, Kuanwala, Haridwar Road, Dehradun, Uttarakhand- 248160 (herein after referred to as the "applicant") and registered with GSTIN -05AAMPH3802P1ZJ under the CGST Act, 2017 read with the provisions of the UKGST Act, 2017. In the application dated 05.05.2022, the applicant submitted that M/s Doon Valley Logistics, is a Proprietorship Firm of Sh. Rameshwar Havelia and has prospected for establishment of a warehouse at Village Kuanwala, Po Harrawala, Dehradun, with a prime objective of leasing the same against rental. For the same the applicant duly constructed foundation by procuring inputs/ manpower and then for further construction of the structure, they entered into an agreement with M/s Lohaar Engineering and Construction Pvt. Ltd., (contractor) vide agreement dated 21.08.2020. The contractor as well as suppliers of inputs required for construction of structure are duly stood registered under the provisions of GST Act,2017 and duly charged GST @18% on the value of works and deposited the same and the GST so deposited stands duly reflected in 2A/2B of the applicant. The applicant has already availed the ITC of GST paid by the contractor and is duly maintain....
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....) Admissibility of input tax credit of tax paid or deemed to have been paid (e) Determination of the liability to pay tax on any goods or services or both (f) Whether the applicant is required to be registered (g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term. 6. Accordingly opportunity of personal hearing was granted to the applicant on 17.06.2022. Sh. Rajesh Gupta, Chartered Accountant, on behalf of the applicant appeared for personal hearing on the said date and re-iterated the submissions already made in their application and the additional submissions filed later. 6.2 During the course of hearing he referred to the judgement of the Hon'ble High Court of Orissa in case of Safari Retreats Pvt. Ltd., Vs. Chief Commissioner of CGST, Bhubaneshwar in WP(C) No. 20463 of 2018 wherein it has been held that ITC stands admissible in respect of inputs/ input services used for creation of such property which shall be leased out for rental, whereon GST is applicable. He also admitted that appeal against the sai....
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....lished with prime objective of leasing the same against rental, whereon GST as applicable shall be discharged by the applicant in terms of Entry Serial No. 2(b) of Schedule -II of the Central Goods & Services Tax Act,2017. Therefore, ITC of the GST Paid on all supplies received / used for creation of warehouse stands eligible to be allowed in terms of provisions of Section 16 (1) in as much as the said supplies are used or intended to be used in the course or furtherance of business. ii) Although in Section 17 of the GST Act, 2017, the availment of ITC on construction of immovable property has been restricted but the same has to be distinguished in the present case. The relevant portion of the Act is reproduced reads as under: "17. Apportionment of credit and blocked credits- (5) Notwithstanding anything contained in sub-section (1) of Section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely: (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract ser....
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....ar that they do not include a situation, wherein a property is being constructed for being leased out against a rental which is subjected to GST, because of the followings: a. That so far as clause (c) is concerned; it only talks about contraction of an immovable property. That since this clause nowhere talks about nature of an immovable property or usage of an immovable property, therefore this clause has to be interpreted with reference to the basic objectives of implementation of GST, which included eradication of cascading effect of taxes. Thus, the term immovable property in clause (c) only indicates such property which is not being put to use for generation of revenue or to be used by an end consumer i.e. culminating in to break in the tax chain. And in the present case, the tax chain is not broken instead the construction of the warehouse will result in a fresh stream of revenues to the exchequer on the rentals generated by the warehouse. b. The denial of input tax credit in such a situation would be completely arbitrary, unjust and oppressive and would be directly opposed to the basic rationale of GST itself, which is to prevent the cascading effect of mul....
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....e paying CGST and SGST on rent received from tenant of the warehouse, clearly goes against the intention of the Legislature and also frustrates the object sought to be achieved by the Legislature in enacting the said CGST Act and SGST Act. It is an undisputed fact that CGST Act and SGST Act are implemented to obviate the cascading effect of various indirect taxes and to reduce multiplicity of indirect taxes. 8. In the present case we are not deciding any wider question but restricting our conclusion to the facts and circumstances which were filed for our consideration in the application. Now we proceed by taking the issue: 8.2 Although the matter is sub-judice, even though we put forth our views on the issue raised by the applicant. In this regard we would like to refer to the relevant provisions of the CGST Act, 2017 which have direct effect on the case in hand. Section 16(1) of the Act stipulates that: "Section 16. Eligibility and conditions for taking input tax credit.- (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 charg....
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....gislative intent that input tax credit may not always be allowed partially or fully and also that the Input Tax Credit (ITC) a provision does not provide for, that each and every all of the GAT paid is eligible to be availed of as ITC. Admissibility and availability of some of the Credits have been restricted under Section 17 in the Act itself. 9.2 In this regard, reliance is placed on the judgment of Hon'ble Delhi Court in the case of Cellular Operators Association of India and Others vs. UOI [2018-TIOL-310-HC-DEL-ST] wherein the Hon'ble Court rejected the claim of the taxpayer to allow credit of unutilised education and higher education cess and upheld the power of the Government to restrict utilisation of balance cess. 9.3 We opine that GST is a new system of taxation which provides setting off of Input Tax Credit (ITC) against the output tax liability along the entire value chain till the final retail level. Under the earlier tax regime, credit of inputs was available for final product in respect of certain taxes/ duties only e.g. credit of duty of excise could not be utilised against VAT and vice versa. It can, therefore, be said that the GST is applicable only o....
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....the applicability of Article 14 to taxing statutes, held that: "When it comes to taxing statutes, the law laid down by this Court is clear that Article 14 of the Constitution can be said to be breached only when there is perversity or gross disparity resulting in clear and hostile discrimination practiced by the legislature, without any rational justification for the same". 9.4 Hence we opine that the right to practice any profession, or to carry on any occupation, trade or business, conferred by Article 19 (g) of the Constitution is not absolute right and the government has the power to impose reasonable restrictions. 10. We find that the applicant has submitted that in view of Section 16 of the CGST Act, 2017, they being a registered person under GST are statutorily entitled to avail benefit of taking credit of input tax charged on supply of goods and services which are consumed or utilized for the construction of the aforesaid property and set off the same against CGST/ SGST payable on output services provided by it to its customers from such property as there is no break in the supply chain. 10.2 We find that the legislative intent flows from the sovereign pow....
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....x credit. 11. The applicant submitted that the appeal in the matter of CCE Vs Safari Retreats (P) Ltd & Others was only admitted by the Hon'ble Supreme Court and there was no stay of said judgment and accordingly the decision of Hon'ble Odisha High Court was binding precedent as on date. They further submitted that this judgment will apply throughout the territory of India, unless and until the same is stayed by the Supreme Court or there is any contrary decision for the same from the jurisdictional High Court. 11.2 We are of the opinion that judicial precedent is an interpretation of law by the Hon'ble Supreme Court which is binding on all the courts of India. For the said opinion we rely on the following judgment of the Hon'ble Supreme Court: i) In the case of Bengal Immunity Co. v. State of Bihar - A.I.R. 1955 S.C. 661, it was held that "There is nothing in our Constitution which prevents us from departing from a previous decision if we are convinced of its error and its baneful effect on the general interests of the public. Article 141 which lays down that the law declared by this Court shall be binding on all Courts within the territory of India ....
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....and are confident that all the Courts and various Tribunals in the country shall follow these salutary observations in letter and spirit." 12. Further, it is on record that Hon'ble High Court of Odisha's decision in case of Safari Retreats (supra) has also been challenged before the Apex Court, which is still pending decision. We also find that Civil Misc. Writ Petition No. 1898/2019 of M/s. Rosewood Hospitality (P) Ltd., on similar issue is pending for decision Hon'ble High Court Of Uttarakhand, wherein "the petitioner" has challenged the vires of the provisions contained in Section 17(5)(c) & 17(5)(d) of the Central Goods and Services Tax Act, 2017 (the CGST Act) and the provisions contained in Section 17(5)(c) & 17(5)(d) of the Uttarakhand Goods and Services Tax Act, 2017 (the UKGST Act) respectively for being ultra vires Article 14 of the Constitution of India in so much as it denies the petitioners and like persons from availing input tax credit (ITC) of the Central Goods and Services tax (CGST), Uttarakhand Goods and Services Tax (SGST/UKGST) and the Integrated Goods and Services Tax (IGST) paid by them upon procuring goods and services to be used for construction ....