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TMI Blog2021 (11) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... icant in the subject case, is making provisions of the facilities/benefits to its members and is not providing any works contract services to its members and therefore the applicant is debarred from taking Input Tax Credit under the provisions of Section 17 (5) (c) of the CGST Act, 2017. - GST-ARA-19/2021-22/B-94 - - - Dated:- 10-11-2021 - SHRI. RAJIV MAGOO, AND SHRI. T. R. RAMNANI, MEMBER PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. Mahavir Nagar Shiv Srushti Co-operative Housing Society Limited, the applicant, seeking an advance ruling in respect of the following questions. 1) Whether the activities carried out by the applicant for its members qualify as supply under the definition of Section 7 of the CGST Act, 2017. 2) Whether the applicant is liable to obtain registration under the GST law? 3) If the activities of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons and rehabilitation works for the society on 21.01.2021. The said contractor is charging service charges along with the GST for carrying out the works contract service. 2.5 Under the GST Laws, the tax is levied on supply of goods or services and the term supply is defined in Section 7 (1) of the CGST Act, 2017. The Applicant, under the assumption of law, that the activities of the society for its members amounts to supply, had obtained registration under GST. The Applicant has filed the present Advance Ruling Application for determining whether the said activities carried out by the Applicant for its members qualifies as supply and hence liable to GST and also further seeks to know that if the activities of the society amounts to supply liable to GST then whether the applicant is eligible to obtain the ITC of the GST charged by contractor on the works contract service of repairs, renovations and rehabilitation provided to the Applicant society. 2.6 The Applicant submits that by a plain reading of the term supply as defined under Section 7(1) of the CGST Act, 2017, the activities carried out by the Applicant for its members does not amount to supply and hence not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 2.11 Applicant submits that though the services provided by contractor qualify as works contract, it will have no bearing on the eligibility of the ITC to the Applicant society. The works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out improvement, modification, repair, maintenance, renovation, alteration, or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Thus even when there is a transfer of property in goods during execution of any works contract, such supply will be included in Works Contract only. Further, Entry 6(a) in Schedule II to the CGST Act provides that Works Contract under Section 2(119) shall be treated as supply of service . Thus works contract will be treated as service and tax would be charged accordingly (not as goods or part goods/part services which was done in the erstwhile regime). 2.12 Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an immovable property, which is meant and intended to be sold as immovable property post issuance of completion certificate does not attract any levy of GST. Consequently, in such a situation, there is a break in the tax chain and therefore there is full justification of denial of input tax credit, as on the completion of the construction, no GST would at all be payable and therefore no set off of the input tax credit would be required or warranted or justified. The applicant has submitted that the position in the present case is totally different, where the repairs and maintenance is collected from the members and GST is charged therein. In that event, the Tax Chain is not broken. The denial of input tax credit in such a situation would be completely arbitrary, unjust and oppressive and would be directly opposed to the basic rationale of GST itself, which is to prevent the cascading effect of multi stage taxation. In this aspect there is a clear violation of article 14 of Indian Constitution. 03. CONTENTION -AS PER THE CONCERNED OFFICER: The jurisdictional/concerned officer has not made any submissions. 04. HEARING The application was admitted and called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 16 (1) of the CGST Act, 2017. 5.5 Section 16 of the CGST Act, 2017, prescribes the eligibility and conditions for taking Input Tax Credit (ITC) and states that 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. 5.6 Further, the Section 17 of CGST/RGST Act, 2017 debars certain activities/ supplies/work from the eligibility to claim ITC. The relevant portion of sub-section 5 of Section 17 of CGST/RGST Act, 2017 in this regard is reproduced below:- (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(17)(e) of the CGST Act, 2017 provision by a club, association, society , or any such body ( for a subscription or any other consideration ) of the facilities or benefits to its members is deemed to be a business. Thus, a housing society may be seen to be providing club and association services to its members but does not provide works contract service to its members. 5.10 The housing society i.e. the applicant in the subject case, is making provisions of the facilities/benefits to its members and is not providing any works contract services to its members and therefore the applicant is debarred from taking Input Tax Credit under the provisions of Section 17 (5) (c) of the CGST Act, 2017. 06. In view of the above discussions, we pass an order as under: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons as discussed in the body of the order, the questions are answered thus - Question Nos 1 and 2 have been withdrawn by the applicant. Question 3: If the activities of the applicant are treated as supply under CGST Act, 2017 then whether the applicant is eligible ..... 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