In re Tvl. Rare SS Properties India Private Limited (AAR GST Tamilnadu)
Authority for Advance Ruling (AAR) (GST) in Tamil Nadu has rejected an application filed by M/s. Rare SS Properties India Private Limited, seeking clarification on the eligibility of Input Tax Credit (ITC) for goods and services used in constructing and furnishing a building for rental purposes. The rejection was based on the finding that an investigation into the same issue was already pending against the applicant, thereby invoking the provisions of Section 98(2) of the Central Goods and Services Tax (CGST) Act, 2017.
Background of the Case
M/s. Rare SS Properties India Private Limited, engaged in “Rental or leasing services” (SAC 997212), leases a property to M/s. Saravana Stores for a monthly rent of Rs. 2.3 crore, on which GST is paid at 18%. The company procures various goods and services, including cement, sand, steel, lifts, air-conditioning plants, DG sets, and professional services, to create and maintain the infrastructure for their rental business. They have been availing ITC on these procurements, utilizing it to offset their GST liability on rental income.
The dispute arose when the department blocked an ITC amount of Rs. 32,86,38,830, availed between May 2021 and March 2023, citing Section 17(5)(d) of the CGST/TNGST Act, 2017, which deals with “blocked credits.” This section restricts ITC on goods or services used in the construction of immovable property, except where such property is being constructed for sale or certain other specific purposes.
