TaxTMI 
TaxTMI 
2022 (12) TMI 806
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty under Chapter XVII of the Act shall be binding only,- (a) On the applicant who had sought it in respect of any matter referred to in sub-Section (2) of Section 97 for Advance Ruling; (b) On the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this Advance Ruling shall be binding unless the law, facts or circumstances supporting the original Advance Ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that Advance Ruling pronounced by it under sub-Section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such Advance Ruling has never been made. Subject: GST - Appeal filed by Shri Satya Dev Bommireddy, Villa 33, Lalitha Bloomfield, Khajaguda, Nanakramguda Rd, Hyderabad 500008 under Section 100 (1) of TGST Act, 2017 against Advance Ruling TSAAR Order No.21/2021 dated 30.09.2021 passed by the Telangana State Aut....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sum of Rs.83,51,925 towards the Appellant's share of the GST and issued a taxable invoice dated 15.07.2019. Tax remitted by the Appellant to his Vendor was reflected as inward supplies in the Appellant's GSTR-2A for the month of July 2019. 5. Upon the receipt of the Occupancy Certificate from the competent authority on 26.07.2019, the Appellant leased out the above said premises to a Lessee vide Lease Deed dt. 19.08.2019. Under the terms of the said Lease Deed, the Appellant is to receive a monthly rental sum of Rs.5,17,908/-, in addition to GST @ 18% on top of it, which amounts to Rs. 93,223/-. The Appellant has been receiving the said lease rentals since then and has been regularly issuing tax invoices for the same. 6. The Appellant has declared the lease rentals received by him from the month of August 2019 onwards in the GSTR-3B returns for the relevant months. Since the Appellant has paid input GST at the time of purchasing the under-construction commercial immovable property, and since the Appellant is utilizing the same property with improvements towards providing output supply of lease services, the Appellant is claiming input tax credit of the tax paid at the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... receipt (purchase of under construction commercial immovable property) of the taxable person (Applicant)? 7. If the term "Goods or Services or both received" in s.17(5)(d) of CGST Act refer to input received, then can the meaning of the term "for construction of an immovable property on his own account" in s.17(5)(d) of CGST Act include the business of the Applicant herein, i.e. for the lease of immovable property? 8. Can purchase of "under construction commercial immovable property" under an indivisible contract without explicit purchase of goods and/or services therein, be termed as a contract for supply "for construction of an immovable property on his own account" within the meaning of s.17(5)(d) of CGST Act, given that the business of the Applicant is lease of immovable property and not construction of immovable property? 9. Regardless of its applicability to the case of the Applicant herein, given the numerous clarifications and notifications by the Dept of Revenue that clearly states that input credit is available for the sale of under construction commercial complexes sold before the issuance of the completion certificate, is not the Authority now prec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r to the input receipt (purchase of under construction commercial immovable property) of the Applicant? Sec 17(5)(c) is enacted with reference to restriction of ITC to works contract services. Works contract is defined under Sec 2(119). 4. Is supply of "under construction commercial immovable property" under an indivisible contract without explicit purchase of goods and/or services therein, a contract of "works contract" within the meaning of s.17(5)(c) of CGST Act? Sec 17(5)(c) of CGST Act, 2017 pertains to all transactions defined under Sec 2(119). 5. Does the term "Goods or Services or both received" in s.17(5)(d) of CGST Act refer to output supply (lease of immovable property) or to the input receipt (purchase of under construction commercial immovable property) of the taxable person (Applicant)? Sec 17(5)(d) of CGST Act, 2017 refers to inputs on which ITC is not available for any taxable person. 6. Does the term "for construction of an immovable property on his own account" in s.17(5)(d) of CGST Act refer to output supply (lease of immovable property) or to the input receipt (purchase of under construction commercial immovable property) of the taxable person ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....GST received for leasing of his immovable property? Sec 17(5) (c) clearly answers this question. 12. Is the Applicant eligible and entitled to claim input tax credit of GST paid to his Vendor for the purchase of under construction commercial immovable property, given he used the same to provide the supply of lease of commercial property, and adjust the same against the rental GST to be paid by him for the supply of lease of immovable property? As discussed in detail above, the answer to this question is No. 10. The present appeal challenges the ruling and is contested on the following grounds :- 1. The Lower Authority, erroneously held that the Appellant is not entitled to claim the input tax credit on the transaction between the Vendor (Sohini Developers) and the Appellant. In terms of Section 16(1) of the CGST Act, 2017 which deals with eligibility and conditions for taking input tax credit, every registered person is entitled to take credit on any supply of goods or services or both which are used or intended to be used in the course of furtherance of business. Thus, the Appellant being a registered supplier of lease is statutorily entitled to avail the cred....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5. The AAR while relying on the case Punjab land development corporation limited v presiding officer labour court, (1990) 3 SCC 682; erroneously held that when clarity of excluding a particular transaction is not clearly mentioned it cannot be inferred by logic. Additionally, TSAAR held that the definition of works contract in section 2(119) of CGST Act covers all the construction activities however, for the purpose of charging section 7, a specific entry is included in Schedule II Clause 5 as a taxation entry for buildings and complexes for sale. Even if there are two separate entries in Schedule II which describe the eligibility of immoveable property to tax, the statement that the construction given by the Statute cannot be extended to any provision in the act is not tenable and the AAR failed to appreciate that a specific entry will take precedence over a general entry, the same is reiterated by the Apex Court in numerous cases. Since Classification of goods under the laws of Customs, Central Excise and GST is always an area of dispute. The Hon'ble Supreme Court's judgement in the case of Westinghouse Saxby Farmer Ltd Vs., Commissioner of Central Excise Calcutta, AIR ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the said commercial premises; since the receipt of rentals and the tax payable thereof are the direct and inexorable consequence of the purchase and use of the under construction commercial premises. 8. Therefore, the Appellant submitted that the GST paid for the purchase of the under construction of commercial premise should be allowed to be claimed as input tax credit since the Appellant is providing output supply of leasing out the same immovable property which is in the course of furtherance of business. 11. Thus the appellant prayed that Advance Ruling may be set aside/modify the impugned Advance Ruling passed by the AAR or pass any such further orders as maybe deemed fit and proper in the facts and circumstances of the case. Whether the appeal is filed in time: 12. In terms of Section 100 (2) of the Act, an appeal against Advance Ruling passed by the Advance Ruling Authority, has to be filed within thirty (30) days from the date of communication thereof to the applicant. The impugned Order dated 30.09.2021 was received by the appellant on 01.11.2021 as mentioned in their Appeal Form GST ARA-02. They filed the appeal on 30.11.2021, which is within the pres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation: For the purposes of this clause- (1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure; 18. Section 2 (119) defines works contract as :- "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of paragraph 5 of schedule II. Now Paragraph 5 of Schedule II is a specific entry treating the supply of immovable property involving the construction of a complex or a building or any civil structure intended for sale as service. GST is leviable on this service. There is another specific entry for composite supply in the same schedule at Para 6 which includes works contract as defined under clause (119) of Sec 2 of the CGST Act, 2017. 19. With regard to 'works contract' the appellant has relied on Hon'ble Apex Court judgement in Commissioner, Central Excise and Customs, Kerala and Ors Vs. Larsen and Toubro Ltd & others (2016)1 SCC 170. The relevant text is extracted as under :- 17. We find that the assessees are correct in their submission that a works contract is a separate species of contract distinct from contracts for services simpliciter recognized by the world of commerce and law as such, and has to be taxed separately as such. In Gannon Dunkerley, 1959 SCR 379, this Court recognized works contracts as a separate species of contract as follows:- "To avoid misconception, it must be stated that the above conclusion has reference to works con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly. The learned Advocate General for Maharashtra was right in his submission that the term "works contract" cannot be confined to a contract to provide labour and services but is a contract for undertaking or bringing into existence some "works". We are also in agreement with the submission of Mr. K.N. Bhat that the term "works contract" in Article 366(29-A)(b) takes within its fold all genre of works contract and is not restricted to one species of contract to provide for labour and services alone. Parliament had all genre of works contract in view when clause (29-A) was inserted in Article 366." (at para 72) 21. Therefore, on a combined reading, it becomes imperative to assess or classify the service availed by the appellant, i.e., to say whether it qualifies as 'works contract service' or not. As discussed earlier, it is evident from the facts of the case that an agreement of sale for commercial property was entered into when the property was under construction. This clearly implies that certain material/goods were involved in completing the construction service. Subsequently, the property was registered/transferred in the name of appellant. From the above, it is ampl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng laws and enactments. It is natural to the corollary that every rule has an exception. The Act, has clearly and distinctly spelt the provisions under separate sections as to who is eligible to avail and what conditions such availment is restricted or denied. Therefore, even though a general condition is prescribed under Section 16 of the Act, for availment of ITC, specific exemptions or disallowance cannot be overlooked or ignored merely because one provision allows it. Section 17(5)(c) clearly specifies that ITC is allowed on input of 'works contract' only if the output service is also works contract. In the instant case, the output service provided by the appellant is leasing/renting of immovable property. As such input tax paid on supply of works contract cannot be availed by appellant for payment of tax on supply of renting of immovable property. 25. Further, the AR himself has clearly mentioned that notification and clarifications issued by board pertains to ITC being available to the contractor for the sale of under construction complexes. The present case doesn't pertain to applicability of ITC to the contractor, constructing the commercial complexes, but to....