The Uttar Pradesh Authority of Advance Ruling has ruled that Input Tax Credit (ITC) cannot be availed on expenses for construction of commercial complex for leasing.
The applicant, KRBL Infrastructure Limited is engaged in the business of constructing commercial complex, renovation, fabrication, furnishing and built out interiors works of the building for the purpose of letting to different tenants on rental basis.
The applicant has sought the advance ruling on the issue of whether the applicant is eligible to take input tax credit in relation to expenditure incurred for ‘Civil and Interior Works’ in building at different floors, since the said property is further used for letting out to different tenants on rental basis viz. for furtherance of business. Whether ITC on construction of commercial complex located at plot No. 18 BLOCK C, SECTOR- 153, NOIDA, Gautam Buddha Nagar, Uttar Pradesh, 201301, will be available to Applicant in case the said building is used for the purpose renting out.
The applicant has placed reliance on the judgement of the High Court Orissa in the ease of M/s. Safari Retreats Pvt. Ltd., and another V/s Chief Commissioner of Central Goods & Service Tax, Bhubaneswar & others in WP (C) No. 20463 of 2018. In the said case, the party had constructed malls which were given further on lease. While holding that Section 17 (5) (d) was not ultra vires, the Hon’ble Court ruled that the party was eligible for credit. We find that the department has filed an appeal {SLP(C) No. 26696/2019} in against the said judgment of the Hon’ble Orissa High Court in Hon’ble Supreme Court, which is presently pending. The Hon’ble Supreme Court, in the case of Union of India V/s West Coast Paper Mills Ltd., as reported in [2004 (164) ELT375 (SC)], has held that once a special leave to appeal is granted and appeal is admitted, the correctness or otherwise of the judgment of the Tribunal becomes wide open. In such an appeal, the Court is entitled to go into both questions of fact as well as law. In such an event the correctness of the judgment is in jeopardy.
The coram of Vivek Arya and Abhishek Chauhan has held that clause (c) and (d) of section 17(5) restricts ITC in respect of works contract services and goods or services used towards construction of immovable property. As such, input tax credit (ITC) of GST paid in relation to ‘civil and interior works’ in building located at C-32, Sector-62, Noida and on ‘construction of commercial complex’ located at Plot No. 18, Block C, Sector-153, Noida does not seems to be admissible.
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