Case Law Details
In re Ashish Arvind Hansoti (GST AAR Maharashtra)
Question : Whether applicant is eligible to claim input tax credit of GST paid on input & input services used for construction of commercial immovable property, subsequently used for renting?
Section (17) (5) (d) bars a taxable person, in the subject case the applicant, from taking input tax credit for construction of immovable property (as in the subject case) which is on his own account, even when such goods or services or both are used in the course or furtherance of business (in the subject case, renting of the said property). Further, it is also seen from the submissions that the immovable property in the subject case is neither a plant or machinery. Thus we find that, Section 17(5) (d) provides that no ITC is available in respect of any goods or services received by a taxable person for construction of an immovable property on his own account even if such inputs and input services are used in the course and furtherance of business. In the instant case the applicant has himself built the immovable property for which he has received various goods or services or both and is using the said property for giving the same on rent to his customers. Therefore, as per Section 17(5)(d), no ITC is available on any goods or services received by him for such construction and the same cannot be claimed by him. Thus, the provisions of Section (17) (5)(d) squarely applies in the subject case and thus the applicant cannot avail input tax credit.
The applicant has placed reliance on the judgment rendered by the Hon’ble High Court Orissa in the case of M/s. Safari Retreats Pvt. Ltd., and another V/s Chief Commissioner of Central Goods & Service Tax & others. In the said case it is seen that the party had constructed malls which were given further on lease. While holding that Section 17 (5) (d) was not ultra vires the Hon’ble Court ruled that the party was eligible for credit.
5.9 However, we find that the department has filed an appeal against the said judgement of the Hon’ble Orissa High Court, in case of Safari Retreats Private Limited Vs Chief Commissioner of Central Goods & Service Tax, which is presently pending. The Hon’ble Supreme Court, in the case of Union of India V/s West Coast Paper Mills Ltd., as reported [2004 (164) ELT375 (SC)], has held that once a special leave to appeal is granted and appeal is admitted, correctness or otherwise of judgement of Tribunal becomes wide open and in such appeal, Court is entitled to go into both questions of fact and as well as law and correctness of judgement is in jeopardy. Appeal is considered to be a continuation of suit and a decree becomes executable only when the same is disposed by the final Court of Appeal.
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OFFhand
On the first. blush comes to one’s mind the BOM. HC judgment in Novel Jolly’s case reported elsewhere on this website; the factual matrix whereof has been set out there in. In that case ,of course, the point of issue(s) decided by the HC was wholly focused on the assessee’s claim for tax exemption on roll over investment . As such, the aspect of GST implication and ITC was not gone into. One is , however, left personally wondering whether that angle , had it been gone into, could/would have made a difference for adjudicating upon the above referred income-tax exemption !!!
As regards income arising from letting out of commercial ‘ÚNITS’, the additional point for consideration is whether, at all, on the facts of and in the circumstances in a given case, there is scope for holding such income to be taxable as ‘business income’ , instead of as ‘house property income’. More so, if that is a case in which assessee is taken to be entitled to and therefore, as per his lawyer’s advice has claimed tax benefit (deduction) under the applicable provisions of sec 80 IA, etc., included in CHAPTER VI -A of the IT ACT. A study of experts’ commentary in any leading TEXT BOOK and the case law cited therein may be found to be of useful guidance. Even so, as there are numerous court decisions , mutually conflicting at that, for varying reasons, for the purpose of forming one’s own independent opinion, with courage of conviction, in order to put forward and press for before any authority, the exercise must begin with an insightful study and incisive understanding of the provisions of the governing law, – if there be more than one, of all such applicable laws. Of course, that is possible provided one has equipped self with, – besides good command over the language (English being the one in which the most statutes are made) – the ability to identify the law (s) to be looked into / through – AGREE !!!
OVER / back to ….
courtesy