Block credit - Works contract services use construction of an immovable property (except plant & machinery) [section 17(5)(c)]

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....ction of plant and machinery * where it is an input services for further supply of work contract services Meaning of Work contract  define in section 2(119) of CGST Act  "Works contract" means contract for building,construction, fabrication, completion, erection installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property where in transfer of property in goods ( whether as goods other form) is involved in the execution of such contract. In a works contract both supply of goods and services are involved hence it shall be treated as a composite supply. Composite supply has been defined under section 2(30) of the CGST Act as "Composit....

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....business and/or for effecting taxable supplies, including zero-rated supplies, and the ITC for such inputs is not restricted under section 17(5) of the CGST Act. Further, capital goods have been clearly defined in section 2(19) of the CGST Act as goods whose value has been capitalized in the books of account and which are used or intended to be used in the course or furtherance of business. Stores and spares, the expenditure on which has been charged as a revenue expense in the books of account, cannot be held to be capital goods." The above circular provides a clear inference that if any item has not been capitalised in the books account, then the same cannot be capital goods and ITC cannot be restricte....

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....ty other than plant and machinery. Examples Example 1:- M/s Manisha project Pvt. Ltd. has been awarded a work contract for construction of road by NHAI. M/s Manish project Pvt. Ltd. has appointed sub contractor M/s Aayush enterprises for his purpose of construction of road. In this case M/s Manish Project Pvt. Ltd.  and M/s Aayush Enterprises provide work contact services for construction of immovable property, * Input tax credit for the tax charged by M/s Manish Project Pvt. Ltd. would  be not available to NHAI since latter is not providing work contract services of construction of  to immovable property.  * M/s Manish Project Pvt. Ltd. is providing  work contract services of construction of ....