The Authority of Advance Ruling (AAR), Tamil Nadu ruled that Input Tax Credit (ITC) is not available on against any goods or services received by the applicant for construction of the Marriage Hall on his own account even if used in course or furtherance of his business of renting the place Goods and services tax act 2017.
The ruling was made by Ms Manasa GangotriKata and Thiru KurinjiSelvaan V.S. Joint Commissioner (ST) / Member on an application filed by M/S. Sree Varalakshmi Mahaal LLP.
The applicant has stated that they have spent several crores of the amount as the investment in the construction of Marriage hall and other all auxiliary amenity buildings. In this aspect, huge quantities of materials and other inputs in the form of steel, cement, sand, aluminium, wires, cables, plywood, paints, lifts, escalators, air-condition plant, electrical equipment’s, DG sets, other decorative items and also services in the form of consultancy service, architectural service, legal & professional service, engineering service and other all related services were utilized for construction purpose. All these goods and services which are purchased /received for such construction are taxable under the CGST, SGST & IGST Acts and as such the applicant has paid about Rs. 2 crores approximately towards payment of CGST, SGST & IGST levies. It is an undisputed fact that the activity of letting out the building (i.e. marriage hall) attracts CGST & SGST levy of 18% as output tax. It is stated by the applicant, that they are prevented from taking the credit of input tax paid as per section 17(5) (d) of the CGST Act 2017 as well as TNGST Act 2017. in the blocked credit condition, input tax credit shall not be available in respect of the goods & services or both received by a taxable person for construction of an immovable property (other than plant machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
The AAR observed that in the instant case the applicant has himself built the marriage hall for which he has received various input services. He is using the hall to rent out to customers for occasions i.e. for the furtherance of his business. Therefore, as per section 17(5) (d), no ITC is available on any goods or services received by him for such construction and the same cannot be claimed by him.
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