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2021 (11) TMI 266 - AAR - GSTLevy of GST on Resident Welfare Association (RWA) - monthly subscription contribution charged from its members - requirement for surrender of GST registration or not - ITC on GST on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary and hardware fittings etc.) and input services such as repair and maintenance services - whether the society can claim ITC on these services either fully or proportionately despite of availing exemption available to residential units? Scope of Advance Ruling application - the applicant is covered under Section 97(2) of the CGST Act, 2017 or not - HELD THAT - In the instant case, the question which has been raised by the applicant is not pertaining to any of the matters mentioned in Section 97 (2) of the CGST Act. In other words, Section 97(2), which encompasses the questions, for the ruling by this Authority does not deal with the issue of whether a GST registration should be surrendered. Hence, it is held that this authority does not have jurisdiction to pass any ruling on such matters - the question posed does not pertain to matter in respect of which an Advance Ruling can be sought under the GST Act. In view thereof, the first question is not maintainable. Whether the society can claim ITC on repairs both major as well as minor? - HELD THAT - Input tax credit generally is not available for construction, reconstruction, renovation, addition, alteration or repair of an immovable property even when such goods or services or both are used in course or furtherance of business. However, the limitation in such a situation is to extent of capitalization. The activity of repair and maintenance which encompasses supply of goods for a construction activity is of immovable nature. The provisions of ITC for the said supply of goods is covered under Section 17(5)(d) read with explanation mentioned therein. Therefore, ITC on GST paid on such goods as mentioned above will not be available to the extent of capitalisation on account of construction service in respect of the concerned immovable property as mentioned in Explanation of Section 17(5) of the CGST Act, 2017. The supply of goods and services supplied for construction work of an immovable nature can be done in composite manner also i.e. works contract. The works contract service for supply of above mentioned goods and service is covered under Section 17(5)(c) read with explanation mentioned therein. Therefore, ITC on GST paid on above said works contract service will not be available to the extent of capitalisation as mentioned in Explanation of Section 17(5) of the CGST Act, 2017. Whether the society can claim ITC on these services either fully or proportionately despite of availing exemption available to residential units? - HELD THAT - The provisions of Section 17 (2) will be applicable in the present case in as much as when goods or services or both are used by the applicant partly for effecting taxable supplies under the GST Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies.
Issues Involved:
1. Surrendering of GST registration. 2. Claiming Input Tax Credit (ITC) on major and minor repairs. 3. Claiming ITC on various services despite availing exemption for residential units. Detailed Analysis: Issue 1: Surrendering of GST Registration Question: Whether the society can stop paying GST and surrender the registration. Observations and Findings: - The applicant society's turnover exceeds INR 20 Lakhs, but the monthly maintenance per member is less than INR 7,500. - The society includes commercial shops, residential flats, and garages. - According to Section 97(2) of the CGST Act, the question of whether a GST registration should be surrendered does not fall under the purview of Advance Ruling. - The Authority concluded that it does not have jurisdiction to decide on the surrender of GST registration. Order: Not answered due to lack of jurisdiction. Issue 2: Claiming ITC on Major and Minor Repairs Question: Whether the society can claim ITC on repairs both major as well as minor. Observations and Findings: - The applicant society pays GST on major repair work but does not claim ITC due to blocked credit provisions under Section 17(5) of the CGST Act. - Section 17(5)(c) and (d) disallow ITC on works contract services and goods/services used for construction of immovable property to the extent of capitalization. - The repair and maintenance activities, being of an immovable nature, fall under these provisions. - ITC on GST paid for such services is not available to the extent of capitalization. Order: ITC on GST paid on works contract services received by the applicant will not be available to the extent of capitalization as per Section 17(5) of the CGST Act, 2017. Issue 3: Claiming ITC on Various Services Despite Exemption Question: Whether the society can claim ITC on various services either fully or proportionately despite availing exemption available to residential units. Observations and Findings: - The applicant provides both exempt and taxable services. - Section 17(2) of the CGST Act states that ITC should be restricted to the extent attributable to taxable supplies. - The society can claim proportionate ITC on input services as per the provisions of Section 17(2) and related rules. Order: The society can claim ITC on input services proportionately as per Section 17(2) of the CGST Act, 2017. Conclusion: 1. Surrendering of GST Registration: The question is not maintainable under the Advance Ruling provisions. 2. Claiming ITC on Repairs: ITC is not available for major repairs to the extent of capitalization. 3. Claiming ITC on Various Services: The society can claim proportionate ITC on input services despite availing exemptions for residential units.
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