ITC for renting Electrical Equipments can be claimed on fulfillment of conditions u/s 16 of GST Act: AAR [Read Order]

The two member bench of West Bengal Goods and Services Tax ( GST ) Authority for Advanced Rulings ( Aar ) ruled that a registered person is eligible to avail credit of input tax if all the conditions laid down in section 16 of the Goods and Services Tax ( GST ) Act, 2017 get fulfilled and such credit is not restricted under sub-section (5) of section 17 of the Act GST Act.

 The assessee, Sun Knowledge Pvt Ltd contended that  tax paid by the assessee on hiring charges is not restricted under sub-section (5) of section 17 of the GST Act is a 100% Export Oriented Unit registered with Software Technology Park of India, Kolkata. It provides ITes services to its clients located in USA. The applicant, as a sub lessee, has entered into a “Sub Lease Deed‟ with M/s Bengal Intelligent Parks Private Limited ( BIPPL ) whereby the sub lessor grants the applicant to use a specified area on the 11th floor in the Building Omega of Bengal Intelligent Park, Block EP & GP, Sector V, Salt lake to conduct business activities from the said premises.

 The assessee contended that in spite of the fact that different types of goods are given together on hire to the applicant by TCGUIH, it cannot be classified as a composite or as a mixed supply. According to the applicant, in the instant case, goods supplied on hire are not naturally bundled in normal course of business and therefore such supply cannot be termed as a composite supply. Further, it shall not be treated as a mixed supply on the ground that “there is purely supply of services and no supply of goods”. The applicant argues that the instant supply would be classified as “leasing or rental services concerning office machinery and equipment ( except computers ) with or without operator” under SAC 997314 and therefore would attract tax @ 18%.

The assessee contended that as an Export Oriented Unit, the applicant is eligible for claiming refund of unutilized input tax credit on export of services. Any wrong credit of input tax may be disallowed in future by the revenue department. The applicant, thus, has made prayer to consider the instant application as a subject matter of admissibility of input tax credit. The authorised representative of the applicant draws our attention to the submission uploaded by the applicant on the common portal in support of the application for advance ruling.

The two member bench comprising Dr Tanisha Dutta ( Joint Commissioner, CGST & CX ) and Joyjit Banik ( Senior Joint Commissioner, SGSTA ) held that registered person is eligible to avail credit of input tax if all the conditions laid down in section 16 of the GST Act get fulfilled and such credit is not restricted under sub-section (5) of section 17 of the GST Act.

The Authority ruled that the tax paid by the assessee on hiring charges is not restricted under sub-section (5) of section 17 of the GST Act. As a result, we hold that the applicant is entitled to take credit of input tax charged by his supplier, namely TCGUIH, subject to fulfillment of all the conditions under section 16 of the GST Act.

Assessee was represented by Kamal Kejriwal and Sujit Kumar Nayak.

To Read the full text of the Order CLICK HERE

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