The Rajasthan Authority for Advance Ruling (AAR), ruled that the Taxpayer cannot claim Input Tax Credit (ITC) while paying Output Tax on making Purchases under Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017.
M/s Glensky Spirits Pvt Ltd, the applicant, is constructing a factory to setting up a plant of fuel ethanol under ethanol blending programme of the Government of India.
The applicant has sought advance ruling on whether the ITC of GST charged by the hired work contractors against construction of factory building including foundation of machinery, rooms for chiller, generators, transformers and erection of electric poles, lying of internal roads, factory building, internal drainage, storage tank, laboratories etc on the construction services with or without material is available to them.
The applicant submitted that all the above expenditure of construction which relating to foundation of plant and machinery, factory building and other constructions on which plant will be established comes under the definition of 17(5) of GST Act 2017.
Section 17(5) of CGST Act refers toa specific provision under GST covering blocked credits or ineligible ITC.
The Two-Member Bench of the Authority comprising Umesh Kumar Garg, Joint Commissioner and MS Kavia, Additional Commissioner observed that “There are many type or construction services are being received by the applicant and no detail submission about construction work categorically was made in application by applicant. We find that availment of ITC on services depends so many factors viz type and nature of services, condition of services supplied etc.”
The Bench concluded by noting that even the interpretation given by the applicant that all the above expenditure of construction which relating to foundation of plant and machinery, factory building and other constructions on which plant will be established comes under the definition of 17(5) of the CGSTAct 2017, is not clear to availment of ITC. Taxpayer cannot claim ITC while paying output tax when they make purchases listed in the provision.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
