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2023 (4) TMI 699 - HC - GSTAvailment of ITC - fulfilment of conditions of Works Contract or not - Case of petitioner is that the demand on the ground that such ITC availed on works contract service for supply of construction of an immoveable property was in violation of Section 17(5) of CGST Act is incorrect and the respondents are not entitled to collect the taxes under the Input Tax Credit since the credit has to be given under the Act - HELD THAT - It is clear that the petitioner has fulfilled all the conditions of work contracts as he is providing work contract services under a contract for construction of building of a Hotel wherein transfer of property in goods is involved in the execution of such contract. The Hotel Polo Pvt. Ltd. is immoveable property. So, the petitioner has been providing work contract services to the owner of the hotel and not for it s own. Further, in providing taxable work contract services for the said construction of Hotel Building, he is entitled to take Input Tax Credit on the Goods and Services being utilized for providing the taxable work contract services. The petitioner do not fall within the definition of Section 17(5)(c) of the CGST Act, 2017. The demand raised on 30.09.2019 and the penalty imposed under Section 74(1) of the CGST Act,2017 is ultra vires , contrary to law and thus, the impugned order dated 01.02.2022, passed by the respondent no.3, the appellate authority affirming the order passed by the adjudicating authority on 13.10.2020, is liable to be set aside and quashed.Petition allowed.
Issues:
The legality and validity of the order passed by the Additional Commissioner (Appeals) under CGST Act challenged. Summary: The petitioner, a construction company, challenged an order by the appellate authority regarding Input Tax Credit (ITC) availed on works contract service for construction of a hotel. The petitioner contended that the denial of ITC was incorrect and lacked reasoning. The respondents raised a demand against the petitioner under Section 74(1) of the CGST Act, alleging a violation of Section 17(5). The appellate authority confirmed the order, leading to the writ petition. The petitioner argued that the appellate authority failed to provide a valid reason for denying ITC on works contract services. The respondents claimed the impugned order was lawful and the charges were clearly specified. The petitioner had already paid a substantial amount as per Section 17(5)(c) of the Act. The Court analyzed Section 17 of the CGST Act and determined that the petitioner, providing work contract services for the construction of a hotel, was entitled to ITC on goods and services used for the contract. The demand and penalty imposed were deemed ultra vires and contrary to the law. Consequently, the impugned order was set aside and quashed. Therefore, the writ petition was allowed and disposed of in favor of the petitioner.
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