In a recent decision the Tripura High Court observed that Goods and Service Tax (GST) Input Tax Credit (ITC) on the goods and services being utilized for providing the taxable work contract services for construction of hotel building.
The petitioner, M/s SR Constructions, is a construction company. They have a works contract agreement with the M/s Hotel Polo Pvt. Ltd. and constructed a hotel at Agartala. In the process of construction, they procured materials and also took the services of Sub-contractors. For the purpose of providing inward output service of works contract service, the petitioner receives inward supply of various goods and services on payment of GST.
In the process, the respondents have raised Input Tax Credit against the petitioner under Section 74(1) of CGST Act. It is the case of the petitioner that the demand on the ground that such ITC availed on works contract service for supply of construction of an immoveable property was in violation of Section 17(5) of CGST Act is incorrect and the respondents are not entitled to collect the taxes under the Input Tax Credit since the credit has to be given under the CGST Act.
Rahul Tangri, counsel appearing for the petitioner contended that the appeal against order has been rejected by the appellate authority but in the impugned order it is nowhere stated any reason so as to hold that the petitioner is not entitled to avail ITC on works contract service. Further, it is submitted that a demand notice cannot be confirmed upon the assessee, without specifying the charges and notifying the exact statutory provisions, based on which such demand is proposed.
P. Datta, counsel appearing for the respondent submitted that since there was nothing unlawful in the impugned adjudication order, the appellate authority has agreed with the finding of the lower adjudicating authority. He further submitted that a clear reading of the impugned adjudication order reveals that in the impugned adjudication order the charges have been specifically put down and provisions have been clearly mentioned.
A Division Bench of the Tripura High Court comprising Acting Chief aJustice Ujjal Bhuyannd Justice Arindam Lodh observed that “The petitioner has been providing work contract services to the owner of the hotel and not for it’s own. Further, in providing taxable work contract services for the said construction of Hotel Building, he is entitled to take Input Tax Credit on the Goods and Services being utilized for providing the taxable work contract services.”
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