9911796707
| Discussions Forum | ||||||||||||||||||||||||||||||||||||
Home  Forum Goods and Services Tax - GST This
A Public Forum.
Submit new Issue / Query
My Issues
My Replies
|
||||||||||||||||||||||||||||||||||||
PROPOSED AMENDMENT TO SECTION 17[5][d], Goods and Services Tax - GST |
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
PROPOSED AMENDMENT TO SECTION 17[5][d] |
||||||||||||||||||||||||||||||||||||
Dear experts You are aware that recently held 55th GST Council meeting has recommended for an amendment to nullify the judgement of the Hon'ble Supreme Court rendered in the case of Safari Retreat - 2024 (10) TMI 286 - SUPREME COURT case. It reads as under: Amendment in section 17(5)(d) of CGST Act, 2017
Posts / Replies Showing Replies 1 to 18 of 18 Records Page: 1
It appears for me that GST Council doesn't want to extend the ITC upon the Goods or Services or both used in the Construction of an Immovable Property (Civil Structure, when read with definition Provided for the same under the General Clauses Act, 1872) on his own Account even such Immovable Property is used in the Course or furtherance of Business The Apex Court justified that it may fall under the ambit & Scope of Plant for Some Service Providers but at the same time, it has ignored the later part of the restriction saying that "Such Plant/ Immovable Property even if used in the Course or furtherance of the business." That why because, it was proposed to replace "Plant or Machinery" with "plant and Machinery." I view of above, I feel that the Apex Court has not given its ruling to main balance between justice and legislative Authority. So, Legislative Authority always have and had that retrospective Power to implement the legislative intent.
Dear Sir Here issue is not about the authority of the Legislature. It has its own prerogative. But justification for such move. There is no mistake in drafting the provision of Section 17(5)(d) per se. Objects of law should remain absolute and not variable. In case the legislature wants to stick to its original intent now, why is it acting swiftly subsequent to the Supreme Court’s judgment? Why not earlier on its own realisation? This is my concern.
In my view, keeping the provisions as they are, would lead to more litigation. We would see petitions on discrimination between 17(5)(c) and (d). Also not to mention -- the long battle that would ensue to identify what PLANT means. Just one more thing if they could have done - define - 'on own account'
Obvious reason might be that the GST Council wouldn't have thought the interpretation done by the Apex Court. Further, it is not he case of the Apex Court exercising its extraordinary Power under Article 142 of the Constitution to fill up the void left by the Legislature to ensure balance between Justice and legislature Authority. It has interpreted what was there in the Section 17(5)(d) of the CGST Act, 2017 but leaving behind/ignoring the latter part of the restriction. I would like to bring to the notice of the Experts Group that the every Apex Court Order will be examined by the Legal, Judicial and Policy Sections of the CBIC and where it is found that the Order is Contrary to the policies of the Government, either by way of reviewing the Provisions or by clarifying the policy intent in the light of the decision of Supreme Court decision after being consulted with the GST Council.
With all its prerogative power, will it not amount to “mistrust” in the lawmakers by way of swinging their moods to make amendment just to build another “china wall” in the way of entitlement to ITC? End of the day, trust in law is paramount than revenue. There are thousands of new avenues to tap revenue or to contain tax evasion. Why to twist the arms of already handicapped taxpayers this way?
There is a heartburn feeling among the stakeholders for retrospective effect. But Parliament can do it least from prospective effect in the interest of equity.
Sh. Sadanand Bulbule Ji, Sir, It shall happen retrospectively. Reason being a huge amount of revenue is involved.
Dear Sethi Sirji Your prudent prediction on retrospective amendment to Section 17[5][d] of the CGST Act has become true with protective clarificatory Explanation in today's Union Budget for 2025-26 to counter the adverse implications on revenue in pursuance of recent judgement of the Hon'ble Supreme Court in Safari Retreat case.
Dear all It's easier for a camel to pass through the eye of the needle than to get legal ITC from the department. But taxpayers cannot miss to bear what is lawfully due to them. Section 17[5][d] has been under a long eclipse. According to me, litigation goes back to Hon'ble Supreme Court in the light of retrospective amendment to it. This has become game of snake and ladder. Time shall decide everything as per its own calendar. Let's wait for the bright Sun of Section 17[5][d] to shine in favour of justice.
Dear all In the light of my last post, fundamental question that remains unanswered as to whether the construction of an immovable property intended for lease, rent or use in the course of furtherance of business on which output tax is payable, other than on own account, would be eligible for ITC under 17(5) (d) or else it falls under Section 17(5) (c)? Can GST Council and CBIC clarify this burning issue of essential entitlement of ITC provided under Section 16(1) of the Act, lest blind taxpayers should search for black cat in the dark room?
Dear all Under indirect taxation, ultimately the consumer bears entire tax burden on every purchase of goods or services or both that he makes from the vendor. That being the position, during the depleted VAT/Central Excise/Service Tax regime, there was flow of ITC to essentially to counter "cascading effect". And the same system of ITC flow has been carried forward in the present GST regime as well, which has subsumed all such depleted Acts. This is fine in theory. Practically the real problem starts by virtue of Section 17 of the GST Act which carries a basket of situations in which ITC has been blocked. This is against the much bugled fundamental principle of countering "cascading effect". Section 17, per se, takes the consumer directly back to Sales Tax regime where there was no such ITC flow at all, which straightway drilled the pockets of the common man. Does it not amount to directly taking away of common man's hard earned money this way under Section 17? So I appeal to the policy makers like GST Council and CBIC to rethink on the adverse and additional burden of tax on the common man in view of the proposed amendment to Section 17[5][d]. Here more than registered taxpayers, the consumers have to bear the extra tax burden in pursuance of blockage of ITC under Section 17[5][d]. If not, how it would ensure the slogan of countering " cascading effect"? Rather it increases the cascading effect. Thus non-issue has been made a big issue despite judicious ruling of Hon'ble Supreme Court in Safari Retreat - 2024 (10) TMI 286 - SUPREME COURT case.
In any retrospective amendment just to nullify the judgement of the Hon'ble Supreme Court, prudence should prevail and not a cleaver manipulation. It's not the question of questioning the authority to do so.But at whose cost? Obviously making the common man to suffer more retrospectively. Consumer is the great partner in the mobilisation of revenue to the Government. Somewhere some caring sense about him is missing. Where is the opportunity for him to aspire for the promised fruits of ease of doing business? All the deeper and juicy promises made during the dawn of GST regime are rubbed out for the sake of revenue alone. Is it justifiable?
2025 (2) TMI 723 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN - IN RE: M/S. HINDUSTAN ZINC LIMITED Input tax credit - Whether input tax credit is available in relation to goods and services received for increasing the height of Tailing Dam used to disposal and treatment of hazardous waste of mining operations, known as tailings in terms of Section 17 (5) (c) and 17 (5) (d) of the Central Goods and Service Tax Act, 2017? - HELD THAT:- Ongoing through the submissions of the taxpayer, it is found that Tailing dams are constructed solely using the by-products generated during the second phase of conversion of ore into concentrates at the milling plant. During the second phase of conversion of ore into concentrates at milling plant, hazardous waste, known as tailings, a form of slurry is generated at the tail end of the benefication process. These tailings in the form of slurry consist of crushed rock, water, and chemicals left over after the extraction of minerals. The provisions of section 17 (5) (c) and 17 (5) (d) of CGST Act, 2017 clarifies that GST paid on works contract, goods and services received by a taxpayer for construction of immovable property is not eligible for ITC. There are two exceptions in clause (d) to the exclusion from ITC provided in the first part of Clause (d). The first exception is where goods or services or both are received by a taxable person to construct an immovable property consisting of a “plant or machinery”. The second exception is where goods and services or both are received by a taxable person for the construction of an immovable property made not on his own account. Construction is said to be on a taxable person’s “own account” when (i) it is made for his personal use and not for service or (ii) it is to be used by the person constructing as a setting in which business is carried out. However, construction cannot said to be on a taxable person’s “own account” if it is intended to be sold or given on lease or license. When the immovable property is in the nature of plant and machinery, then the works contract, goods and services received for construction of plant and machinery will be eligible for ITC and will not be hit by the restriction under the said clause (c) or (d) of Section 17 (5) of the CGST Act, 2017. Since tailing dams are resting on foundation of natural rock or soil with the help of cement and is stretch over several kilometers, it is clear that they are immovable and are thus covered under definition of “immovable property”. We find that the term ‘civil structure’ has also not been defined in the GST law. A general understanding of the term can be derived from the definition of ‘civil engineering’ given as: “The profession of designing and executing structural works that serve the general public, such as dams, bridges, aqueducts, canals, highways, power plants, sewerage systems and other infrastructure” - the tailing dam is a civil structure and qualifies in the definition of immovable property. Therefore, the submission of the applicant that it is covered under “Plant and Machinery” is not tenable. The tailing dams can be simply termed as a structure providing storage facility for waste products of mining operations. These storage facilities does not play any role in the quantity as well as quality of the minerals extracted & processed and metals manufactured by the taxpayer. Thus, the tailing dams can not be qualified to be used for carrying on the core business activities. Conclusion - Input tax credit is not available in relation to goods and services received for increasing the height of Tailing Dam used to disposal and treatment of hazardous waste of mining operations, known as tailings in terms of Section 17 (5) (c) and 17 (5) (d) of the Central Goods and Service Tax Act, 2017.
Scope of “plant and machinery” in the explanation appended to Section 17 of the CGST Act applies to the expression “plant or machinery” used in clause (d) of sub-section (5) of Section 17 or not - constitutional validity of clauses (c) and (d) of Section 17 (5) and Section 16 (4) of the CGST Act - the issue is similar to the issue in Safari Retreats (P.) Ltd. [2024 (10) TMI 286 - SUPREME COURT], which is not considered properly - HELD THAT:- In the instant case, a perusal of the impugned order in original at Annexure-P dated 09.12.2024 will indicate that the aforesaid judgment of the Apex Court in Safari Retreats (P.) Ltd., has not been considered in its right perspective. Under these facts and circumstances, it is deemed just and appropriate to dispose of the petition by remitting the matter back to the respondent for reconsideration afresh in accordance with law. Matter is remitted back to respondent No.1 for reconsideration afresh in accordance with law - petition allowed by way of remand. No.- WRIT PETITION NO. 4835 OF 2025 (T-RES) Dated.- March 5, 2025 [ This case was represented by me before the Respondent]
Sh.Sadanand Bulule, Ji, Sir, A great moral victory indeed for you. Congratulations. Although it has been remanded back for de novo proceedings yet it opens the door for fair justice to the petitioner. Now the issue can be contested afresh with more avenues/ with latest case laws and developments/amendments in GST laws.
Sirji, much obliged for your inspirational words. Indeed I shall do better than the best. 🙏🙏
Dear Sir, By way of remand you have got an opportunity to raise additional point (question of law) and that is to challenge the constitutional validity of retrospective amendment proposed in the Budget for the Financial Year 2025-26.
Sirji, it is on the cards. Thanks for your reminder. Page: 1 |
||||||||||||||||||||||||||||||||||||
.jpg)
