TaxTMI 
TaxTMI 
ITC on Support services by JV to its member
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....TC on Support services by JV to its member<br> Query (Issue) Started By: - Narayan Pujar Dated:- 21-3-2026 Last Reply Date:- 1-4-2026 Goods and Services Tax - GST<br>Got 6 Replies<br>GST<br>In one of the cases, two parties formed a Joint Venture (JV) pursuant to a railway contract awarded to the JV. As per prevailing industry practice, the entire contract was sub-contracted on a back-to-back (on a....
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.... toto) basis to the lead member of the JV. Accordingly, the member executed the project and raised invoices on the JV, which in turn raised invoices on the Railways. Owing to contractual and statutory obligations, the JV incurred certain expenses such as bank guarantee charges, labour cess, audit fees, and similar costs. These expenses are intrinsic and unavoidable for execution of the railway ....
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....contract and are directly attributable to the said project. Given that the entire contract was sub-contracted to the JV member, the expenses incurred by the JV effectively constitute support services facilitating execution of the contract by the member. Accordingly, the JV has raised tax invoices on the member towards provision of such support services. The said arrangement is also in consonanc....
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....e with Section 7(1)(c) of the CGST Act, 2017, read with Schedule I, which recognizes certain transactions as deemed supplies. However, the department has disputed the eligibility of input tax credit (ITC) in the hands of the JV member (recipient), alleging that the transaction is merely a pass-through of expenses and not in the course or furtherance of business. How should one defend the ITC....
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.... here? Reply By Vijay kumar: The Reply: As per Sn.16(1), ITC is eligible if the service is used for business or furtherance of business. If same came can be proved by JV member, there would be no issue. Both being different entities, books of account should be relied to prove the same. If it is supply at the hands of JV and JV paid the tax in terms of Sn.7 r/w Sn.15 r/w Rule 28, ITC eligibili....
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....ty of JV member cannot be questioned, in my view. Further, Sn.16(2) conditions should be satisfied like invoice, receipt of service from / thr' JV, payment by JV member to JV etc. Reply By Raam Srinivasan Swaminathan Kalpathi: The Reply: Dear Querist I am of the opinion that you have a strong case as regards the ITC availment despite the claims raised by the GST Department....
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...., subject of course to meeting the conditions set out in Sec.16(2) r w r 36. I would request you to go through the following landmark case law delivered by the Bombay HC. This may provide the much needed clarity - 2024 (11) TMI 978 - BOMBAY HIGH COURT -Re L&T IHI Consortium (2025). Reply By KASTURI SETHI: The Reply: There is no substance in the contention of the department. It is stretching ....
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....the law. Reply By KASTURI SETHI: The Reply: The department is applying the term, "pass-through' in a different way. Here its application/use is not in the fitness of things. Reply By Shilpi Jain: The Reply: The credit is eligible. The officer is only being more creative in putting reasons to deny the credit!! Reply By Narayan Pujar: The Reply: Thank you all for your opinions.<br> D....
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