Case Law Details
In re GGL Hotel and Resort Company Ltd. (GST AAAR West Bengal)
Whether ITC is admissible on lease rental paid for the pre-operative period for the land on which a hotel is being constructed
The Appellant acquired land from the WBHIDCL on lease paying an upfront amount as premium and a yearly lease rental @10% on the premium with an escalation clause from the third year of lease. The premium paid by the Appellant is exempted under SI. No. 41 (SAC 9972) of Notification No. 12/2017-CT(Rate) dated 28.06.2017, as amended vide Notification No. 32/2017-CT (Rate) dated 13.10.2017 and Notification No. 23/2018-CT (Rate) dated 20.09.2018. Whereas lease rental paid by the Appellant is taxable under SI. No. 16 (iii) (SAC 9972) of Notification No. 11/2017-CT(Rate) dated 28.06.2017, as amended vide Notification No. 1/2018-CT (Rate) dated 25.01.2018. Lease premium and lease rental both are parts of the project cost, the former being one-time fixed amount and the latter being a variable cost. Both lease premium and lease rental are classified under SAC 9972 being Real Estate Services. As the lease premium paid by the Appellant is exempted under SI. No. 41of the Rate Notification under GST Act on satisfaction of stipulated criteria the question of availing input tax credit does not arise. So the moot question is whether input tax credit on lease rental paid is available in the pre-operative period. It transpires from the above discussion that the Appellant is constructing the Eco Resort on his own account in course of furtherance of its business of providing hospitality service, for which one of the input service availed is lease rental service. The ambit of the blocked credit as per clause (d) of sub-section (5) of section 17 is broad as it includes such goods or services or both when used in the course of thrtherance of business. So clause (d) of sub-section (5) of section 17 restricts the Appellant from availing input tax credit on lease rental paid,
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING WEST BENGAL
1. This Appeal has been filed by the GGL Hotel and Resort Company Ltd. (hereinafter referred to as “the Appellant”) on 06.02.2019 against Advance Ruling No. 30/WBAAR/2018-19 dated 08.01.2019, pronounced by the West Bengal Authority for Advance Ruling in the matter of the M/s GGL Hotel and Resort Company Ltd.
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