2021 (8) TMI 532 - AAR - GST

Input tax credit - Sub-Contractor providing works contract services - purchases made by the applicant on their own account for furtherance of business - HELD THAT - Section 17 sub-section (5) Clause (d) restricts input tax credit of goods and services used by a person for construction of an immovable property (except plant and machinery) on his own account. Thus, if a person purchases construction material to provide the constructions services by using the said material, ITC shall not be available. Input Tax Credit shall not be available to the applicant on the above purchases made on applicant's own account for furtherance of business under Section 17 (5) (d) of the CGST/SGST Act, 2017.

Summary

Issues Involved:
1. Eligibility of Input Tax Credit on purchases made for furtherance of business under Section 17(5)(d) of CGST/APGST Act, 2017.

Detailed Analysis:
The case involved an application filed by a sub-contractor seeking clarification on the eligibility of Input Tax Credit (ITC) on various goods purchased for the construction of immovable property. The applicant, registered under the AP Goods & Services Tax Act, had entered into an agreement with a main contractor for construction work. The applicant charged 18% GST on tax invoices issued to the main contractor and sought clarification on ITC eligibility for goods purchased on their own account. The questions raised before the authority pertained to different goods with varying GST rates, including PVC Ghamela, Cement, Wood cutting wheel, and Cotton Yarn Waste Cloth, among others.

During the virtual hearing, the authorized representative reiterated the submissions made, leading to a detailed discussion and examination of the issues raised in the application. The primary issue was to determine the admissibility of ITC on purchases made for business purposes under Section 17(5)(d) of the CGST/APGST Act, 2017. Section 17(5)(d) specifically restricts input tax credit on goods and services used for the construction of an immovable property, excluding plant and machinery, when such goods or services are received by a taxable person for construction on their own account.

The ruling by the Authority clarified that the applicant was not eligible to claim Input Tax Credit on the purchases made on their own account for furtherance of business. The decision was based on the provisions of Section 17(5)(d) of the CGST/SGST Act, 2017, which explicitly restricts ITC for goods and services used in the construction of immovable property on the taxable person's account. Therefore, the applicant's request for ITC on the specified goods, including Cement, Wood cutting wheel, and other items, was denied based on the legal provisions outlined in the ruling.

This comprehensive analysis of the judgment highlights the key issues addressed by the Authority for Advance Ruling in Andhra Pradesh regarding the eligibility of Input Tax Credit for purchases made by the applicant for business purposes, specifically in the context of construction activities governed by the relevant provisions of the GST Acts.