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No ITC available on Project Development Services for Development of SIPC: AAR [Read Order]

SIPC - ITC - Project Development Services - Taxscan

The Gujarat Authority of Advance Ruling (AAR) ruled that the Input Tax Credit (ITC) shall not be available under the CGST Act, 2017, on the project development services like Programme management consultancy, Marketing Consultancy, Land levelling and other related works, Roads, Water, Electricity, and Drainage Infrastructure and other related works for the development of the Smart Industrial Port City (SIPC) i.e. the construction of the immovable property.

The applicant, M/s. Deendayal Port Trust submitted that they have been directed by the ministry of shipping to prepare a master plan comprising future projects and for utilization of land resources with the endeavour for developing a port-based smart city. Keeping in view the above directions and vision of the government, Deendayal Port trust is developing one of India’s first Smart Industrial Port City (SIPC) within Gandhidham-Kandla-Adipur Complex as part of the Sagarmala project.

At present, Deendayal Port Trust is incurring various project development expenses like Programme management consultancy; Marketing Consultancy; Land levelling and other related works; Roads; Water, electricity, & Drainage Infrastructure; and Other related works for developing SIPC.

The applicant sought the advance ruling on the issue whether the “Input Tax Credit” for expenses at project development expenses like Programme management consultancy; Marketing Consultancy; Land levelling and other related works; Roads; Water, electricity, & Drainage Infrastructure; and Other related works for developing SIPC shall be available to DPT or not.

The Authority consisting of member Sanjay Saxena and Mohit Agarwal ruled that the Input Tax Credit (ITC) shall not be available under the CGST Act, 2017, on the project development services like Programme management consultancy, Marketing Consultancy, Land levelling and other related works, Roads, Water, Electricity, and Drainage Infrastructure and other related works for the development of the Smart Industrial Port City (SIPC) i.e. the construction of the immovable property.

“We observe that the applicant is engaged in the development of port-based smart city i.e. Smart Industrial Port City (SIPC) within Gandhidham-Kandla- Adipur Complex. The said project development is nothing but a construction of immovable property and any project development services or goods or works contract used for the construction of immovable property shall attract the provisions of clauses (c) and (d) under sub-section (5) of Section 17 of the CGST Act, which specifically denies input tax credit in respect of works contract services or goods and services used for the construction of the immovable property. Therefore the said project development services of Programme management consultancy, Marketing Consultancy, Land levelling and other related works, Roads, Water, electricity, & Drainage Infrastructure and other related works for developing SIPC are not eligible for Input Tax Credit under the CGST Act, 2017,” the AAR said.

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