The Maharashtra appellate Authority of Advance Ruling (AAAR) held that Input Tax Credit (ITC) cannot be availed by Housing Society, providing works contract service for repairs, renovations & rehabilitation works.
The Applicant, M/s Mahavir Nagar Shiv Srushti , is a co-operative housing society and has constructed a building on the plot allotted by MHADA. Objects of the societies were fulfilled using the contribution collected by issuing invoice from its members who are also the shareholders of society. Later Appellant appointed M.S Unique Rehab Pvt. Ltd for major repairs.
The appellant sought the advance ruling on the issue whether the applicant is eligible to claim the ITC on input and inputs services for repairs, renovations & rehabilitation works carried out by the Applicant. The MAAR (Maharashtra authority for advance ruling held that appellant was ineligible for ITC. Aggrieved by this order appellant filed appeal before the AAAR (Maharashtra Appellate authority for advance ruling).
Shri C.B. Thakar appeared on behalf of appellant contended that the Appellant was eligible to avail the ITC of the tax paid on the works contract services, received by them in respect of the repair and renovation work of the society building in section 16(1) r/w exception clause incorporated under clause (c) of section 17(5) of the Central Goods and Service Tax 2017, where it is explained that work contract services were included in the input tax credit. The counsel also contended that they were acting only as a provider of the works contract services for their members.
The Respondent. i.e. the Assistant Commissioner contented referring section 2(17) (e) that the Appellant was providing club or association services to its members, and not the works contract services had been contended by the Appellant and not eligible for the income tax credit and also held that the restrictions laid down under section 17(5)(d) of the Central Goods and Service Tax 2017, would be clearly applicable in the instant case.
The AAAR bench comprising of Shri Ashok Kumar Mehta, (Central Tax member) and Shri Rajeev Kumar Mital, (State Tax member) upheld the advance ruling passed by MAAR that, the Appellant-society is not eligible to avail ITC of the tax paid on the works contract services. AAAR also observed that Appellant didn’t fulfil the conditions laid down in section 17 (5) of the Central Goods and Service Tax Act 2017 and didn’t provide any works contract service. The society itself is not works contract service provider, nor it is in the business of providing works contract services. The works contract services received by society, from appointed contractor, are for the common benefit of the members therefore held not eligible for ITC.
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