In re Suswani Foundations Private Limited (GST AAR Tamilnadu)
Introduction: The case of Suswani Foundations Private Limited, seeking Advance Ruling in Tamilnadu regarding Input Tax Credit (ITC) availability under GST for constructing godowns, brings forth critical considerations under Section 17(5)(d) of the CGST Act. This analysis delves into the details and implications of the ruling.
Detailed Analysis
The applicant, Suswani Foundations Private Limited, aims to construct godowns for commercial purposes, intending to rent them out to registered dealers. They seek clarity on whether ITC is available for inputs used in the construction process. The crux of their argument lies in their interpretation of Section 17(5)(d) of the CGST Act, contending that since the godowns serve as the source of income, they should be entitled to claim ITC.
However, the jurisdictional authorities maintain that as per Section 17(5)(d), ITC is not available for inputs used in constructing immovable property for one’s own account, irrespective of whether it’s for furthering business purposes. They emphasize that this includes all goods and services used in the establishment of such property, such as materials like cement, steel, and services provided by architects or consultants.
The applicant’s reliance on Article 14 of the Constitution, advocating for equal treatment under the law, is refuted. The authorities assert that the legislative intent behind Section 17(5)(d) is explicit in disallowing ITC for self-construction projects, irrespective of the subsequent use of the property. The ruling underscores the legislative provisions, reinforcing the denial of ITC in such scenarios.
Conclusion: In conclusion, the ruling by the Authority for Advance Ruling in Tamilnadu holds that Suswani Foundations Private Limited is not eligible for Input Tax Credit on inputs used for constructing godowns meant for commercial rent. The decision aligns with the clear provisions of Section 17(5)(d) of the CGST Act, emphasizing the legislative intent to restrict ITC in self-construction projects.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TAMILNADU
M/s. Suswani Foundations Private Limited, No. 125 – 90 and 90/1, Sydenhams Road, Choolai, Chennai – 600003(hereinafter referred to as the ‘Applicant1) are registered under the GST Acts with GSTIN: 33AAVFK6262D1Z6. They have preferred an application seeking Advance Ruling on the following:-
“Whether ITC is available on Inputs to the Assesses when the Godowns constructed by him is entirely meant for renting it out for Commercial purposes to registered dealers.”
2.1 The Applicant submitted a copy of challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017.
2.2 The jurisdictional authorities of the Centre and State were addressed to report if there are any pending proceedings against the Applicant on the issues raised in the ARA application and also for their comments on the issues raised.
3.1. In their application for Advance Ruling, the Applicant has stated that –
> They are constructing around 1.62 Lakhs square feet of industrial building to be rented out as ‘Godowns’ for commercial purpose, at Mevalurkuppam Village, Sriperumbudur Taluk, Kancheepuram District.
> They will be purchasing Cement, Steel, FEB Sheet, Building Materials like bricks, sand, blue metals etc. and engaging Consultants/Architects for around Rs. 12 Crores for the construction of Godowns and the approximate GST amount that they may have to pay will be approx. Rs.2.5 Crores.
> These Godowns are not for personal use but meant for business purposes;
> hey would be letting them for rent and in turn invoices of rent around 40 lakhs per month would be raised by the Applicant with GST.
> They also submitted-
