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TMI Blog2020 (1) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... r Limited, SP 86-88, Industrial Area Bhiwadi, Alwar, Rajasthan 301019 (hereinafter called as "the applicant") is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2)(d) given as under: d. admissibility of input tax credit of tax paid or deemed to have been paid; * Further, the applicant being a registered person (GSTIN is 08AAAC10868D1ZS as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT: * The applicant is incorporated under the Companies Act, 1956 bearing CIN L74899DL1978PLC009038 and has its registered office at 11 Community Centre, Saket, New Delhi - 110017. The Applicant also has its office in Rajasthan from where it undertakes its business operations. Accordingly, it is registered in Rajasthan and falls within the jurisdiction of Bhiwadi, Distt. Alwar, Rajasthan. Its GSTIN in Rajasthan is 08AAAC10868DIZS and its state jurisdiction authority is Special Circle - 1, Bhiwadi. * The Applicant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has entered into agreement with M/s. Akanksha Contracts Pvt. Ltd. (hereinafter referred to as the "Agreement 1") for supplying various goods and services for setting up the MRO facility on the Industrial Land. Copy of the Agreement 1 is enclosed herein as Annexure-A. * The Applicant issues purchase order on M/s. Akanksha Contracts Pvt. Ltd for supplying the goods and services for setting up of MRO facility. Copy of the sample purchase orders issued by the Applicant is enclosed herein as Annexure-B. * The goods are procured by M/s. Akanksha Contracts Pvt. Ltd on a bill to ship to basis. In the invoice issued by the supplier, the bill to party is M/s. Akanksha Contracts Pvt. Ltd. and ship to party is the Applicant. A copy of sample invoices is enclosed as Annexure-C. * Against the material receipts, the Applicant has paid Rs. 97.37 lacs amount in advance for procuring of goods and services. Further, it has been agreed that M/s. Akanksha Contracts Pvt. will raise a consolidate invoice for each month, which will include value of both goods and services so supplied along with adjustments regarding the advance so received. The copy of the documents issued by M/s. Akanksha Contracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not include the tax paid under the composition levy." * Section 16 of the GST Act provides for the eligibility and conditions for taking input tax credit. Relevant portion of this provision is extracted as following: "Section 16 (1) - Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless-- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation-For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions such as possession of invoice, receipt of goods/ service, payment of tax to Government etc. It can be seen that one of the objective behind introduction of GST viz. seamless flow of credit is being fulfilled with Section 16(1) of the CGST Act. The major intent behind GST is that wherever, the supplier is engaged in providing taxable supply, it should be given credit of the inputs and input services used by it for providing the said supply. * As mentioned earlier, the eligibility of credit is subject to fulfillment of conditions under Section 16(2) of the CGST Act. In the instant case, the Applicant before availing the credit will be fulfilling all the conditions such as receipt of tax invoice, receipt of goods/ service, payment of tax to Government by supplier, furnishing of returns etc. * Section 17 (5) of the CGST Act is a non-obstante clause to Section 16(1) of the CGST Act. Section 17 (5) of the CGST Act provides certain cases in which credit is not available. Clause (d) of Section 17 (5) provides that goods and services received by taxable person for construction of an immovable property (except plant and machinery) on his own account including when such goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that view of the matter, in our considered opinion the provision of Section 17(5)(d) is to be read down and the narrow restriction as imposed, reading of the provision by the Department, is not required to be accepted, inasmuch as keeping in mind the language used in (1999) 2 SCC 361 = 1999 (1) TMI 34 - SUPREME COURT (supra), the very purpose of the credit is to give benefit to the assessee. In that view of the matter, if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay under Section 17(5)(d) of the CGST Act. * It is further submitted that in the case of Tara Exports v. Union of India, 2018 (9) TMI 1474, Madras High Court, it has been observed by the Hon'ble High Court that one of the progressive ideal of GST is to avoid cascading taxes. GST Laws contemplate seamless flow of tax credits on all eligible inputs. * It is submitted that when the output is taxable, the inputs and input services used for undertaking the output supply are eligible for credit. In this regard, reliance is placed on the case of Eicher Motors Ltd. v. Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NG In the matter, personal hearing was granted to the applicant on 27.09.2019 at Room no. 2.29 NCRB, Statue Circle, Jaipur. The applicant vide letter dated 26.09.2019 requested for adjournment of PH. Accordingly second PH was granted on 10.10.2019. Mrs. Disha Jain, Advocate, authorized representative of the applicant appeared on personal hearing and she reiterated the submissions already made in the application and submitted a compilation of brief facts of case and interpretation. She further requested that the case may be decided at the earliest. 4. COMMENTS OF THE JURISDICTIONAL OFFICER The jurisdictional officer (Deputy Commissioner, State Tax (SGST), Special Circle-I, Kar Bhawan, UIT Sector-6, Bhiwadi, Alwar, Rajasthan 301019) has submitted his comments vide letter dated 22.08.2019 which can be summarized as under: In the present case if the outward supply of the applicant is taxable on which it will be paying GST at applicable rate, it is eligible to claim credit of inputs and input services which are being used for making further taxable supply which is renting of immovable property. The fact of the case of M/S Safari Retreats are also similar to the present application. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes: the integrated goods and services tax charged on import of goods; the tax payable under the provisions of sub-sections (3) and (4) of Section 9; the tax payable under the provisions of sub-section (3) and (4) of Section 5 of the Integrated Goods and Services Tax Act; the tax payable under the provisions of sub-section (3) and sub-section (4) of Section 9 of the respective State Goods and Services Tax Act; or the tax payable under the provisions of sub-section (3) and subsection (4) of Section 7 of the Union Ten-itory Goods and Services Tax Act, but does not include the tax paid under the composition levy." * The Section 16 of GST Act, 2017 provides eligibility and conditions for taking Input Tax Credit (ITC) which are reproduced as below- (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of credit of inputs/ input services in case where the output is not taxable is only one dimension of the law. This is an implicit interpretation which is not the intentional outcome of the said section. The purposive dimension of the said section is blocking of credit for construction of immovable property. It is clear while going through the facts that, the activity has two phases viz. construction of immovable property and leasing of the same for MRO purposes. The question raised by the applicant regarding ITC is restricted with first phase of construction itself. Therefore, contention of the applicant that output supply which will take place post construction is taxable or not is immaterial in determining eligibility of ITC. The applicant is paying GST on goods and services supplied by M/s. Akanksha Contracts Pvt. Ltd. for construction of MRO facility on the applicant's land. The provisions of Section 17(5)(d) of GST Act, 2017 is clear that if the goods or services are used for the construction of an immovable property, the ITC shall not be available irrespective of the use of the said property. * The various case laws referred by the applicant in their submission viz. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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