No ITC on Goods and Services received and used in Construction of Warehouse: AAR [Read Order]

The Authority for Advance Ruling (AAR), Madhya Pradesh has held that the ITC is not admissible on the goods and services received and used in the construction of warehouse used for letting out on rent as per the Section 17(5)(d) of CGST Act, 2017.

The present application has been filed u/s 97 of the Central Goods and Services Act,2017 and MP Goods and Services Act, 2017  on 12.112019 by M/S Unity Traders.

The Applicant, M/S. Unity Traders is a partnership firm engaged in providing Clearing and forwarding Agent Service. As a C&F Agent, the firm stores goods of other companies and charges Rent for the same. The firm has two GSTR numbers, one for the unit located in Jabalpur(M.P.) & another for the unit located in Raipur(C.G.). The Revenue from the operation of the firm consists of the following:

1.  C&F Commission,
2.  Warehouse Rent and
3. Other reimbursement freight etc.

The bench comprising of Joint Commissioner, Manoj Kumar Choubey and Joint Commissioner, Virendra Kumar Jain pronounced the order based on an application filed by M/S. Unity Traders.

The bench observed that the Section 16 of CGST Act, 2017, every registered person shall entitle for ITC subject to such conditions and restriction as may be prescribed and also the Section 17(5) of CGST Act, the Input tax credit shall not be available on the goods and services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

The authority also said that the applicant has wrongly interpreted the Section to avail the benefit of inadmissible ITC and it is not allowed as per the Section 17(5) (d) then it is unwarranted, unreasonable, arbitrary, unconstitutional, illegal, violation of fundamental right, double taxation is baseless as the Section 17(5)(d) of CGST Act is very clear and there is no scope of interpretation.

The bench further said that the applicant constructed the building/warehouse which is an immovable property and as per the exclusion clause 17(5) (d) of CGST Act, 2017, the input tax credit is not available on the goods and services used in the construction of building/warehouse.