2018 (10) TMI 1050 - AAR - GST

Input tax credit - CGST & SGST charged in respect of brokerage services for renting of immovable property - outward supply - Whether applicant are eligible to take Input Tax Credit of the CGST & SGST charged by M/S Catalyst Consulting Chennai in respect of brokerage services and adjust the same against output tax payable against Renting of immovable property? Held that - The applicant has received an inward supply of real estate brokerage services for renting of property on a fee basis. Due to the services of Catalyst Consulting Chennai, the applicant was able to make an outward supply of renting of the property to Vantec Logistics India Private Limited. Hence, this inward supply was used in the course of the applicants business. This inward supply rendered by catalyst Consulting is not listed in any of the exceptions mentioned in Section 17 (5) of CGST Act/ SGST Act for availing the input tax credit of CGST and SGST. The applicant eligible to take credit of the CGST & SGST charged by M/S. Catalyst Consulting in the Tax invoice No. C- 007/17-18 dated 20-Dec-17 raised on the applicant for real estate brokerage services for renting of property on a fee basis rendered by Catalyst Consulting, subject to the conditions as per Section 16, 17 and 18 of CGST & SGST Act. Ruling - The applicant is eligible to take credit of the CGST & SGST charged by M/s. Catalyst Consulting Chennai in the Tax invoice No. C-007/17-18 dated 20.12.2017 raised on the applicant for real estate brokerage services for renting of property on a fee basis rendered by Catalyst Consulting, subject to the conditions as per Section 16, 17 and 18 of CGST & SGST Act.

Summary

Issues involved:
Admissibility of input tax credit for CGST & SGST charged by a brokerage firm for leasing property.

Analysis:

1. Background and Application: M/s. Adwitya Spaces Private Limited sought an Advance Ruling on the eligibility to claim Input Tax Credit (ITC) for CGST & SGST charged by a brokerage firm, M/S Catalyst Consulting Chennai, in relation to brokerage services for leasing property.

2. Applicant's Position: The applicant leased a property to M/s. Vantec Logistics India Private Limited through Catalyst Consulting, who invoiced for brokerage services with CGST & SGST. The applicant claimed the tax as input tax credit under CGST Act Section 2(62) and sought clarification on availing ITC for the brokerage fees paid.

3. Hearing and Documents: The Authorized Representative presented GSTR filings, lease agreements, invoices, and other relevant documents. Catalyst Consulting facilitated the lease without a formal contract, and the applicant received invoices for brokerage services with CGST & SGST.

4. Decision on Input Tax Credit: The primary issue was the admissibility of ITC for tax paid to Catalyst Consulting for brokerage services. The services provided fell under the definition of "Supply" in CGST Section 7(I)(a) and were related to renting buildings, categorized under SAC 997222.

5. Legal Provisions: Section 16(1) of CGST Act outlines conditions for claiming ITC, emphasizing the use of input goods or services in the course of business. The applicant's receipt of brokerage services for leasing property aligned with business activities, meeting the criteria for ITC under Sections 16, 17, and 18.

6. Ruling: The Authority ruled that the applicant is eligible to claim ITC for the CGST & SGST charged by Catalyst Consulting for brokerage services related to renting property, subject to compliance with provisions under Section 16, 17, and 18 of the CGST & SGST Act.

This detailed analysis of the judgment clarifies the issues, applicant's contentions, legal provisions, and the final ruling regarding the admissibility of input tax credit for CGST & SGST in the context of brokerage services for property leasing.