Agratas Energy Storage Solutions Pvt Ltd (GST AAR Gujarat)
M/s Agratas Energy Storage Solutions Pvt. Ltd., a wholly owned subsidiary of Tata Sons, registered under GST, sought an advance ruling from the Gujarat Authority for Advance Ruling (AAR). The applicant entered into a 50-year lease agreement with the Government of Gujarat, beginning on 26 June 2024, for industrial land measuring approximately 321 acres in Sanand GIDC, Ahmedabad. The lease requires annual rent payment at 6% of the market value (with a 10% escalation every five years). The applicant is liable to pay GST under the Reverse Charge Mechanism (RCM) on this lease service, as per Section 9(3) of the CGST Act and Notification No. 13/2017 (R) dated 28.06.2017.
The applicant sought advance rulings on four key questions:
1. Eligibility to claim Input Tax Credit (ITC) of GST paid on the lease rental for land used for construction of the factory building.
2. ITC eligibility for periods before and after construction.
3. ITC eligibility when repairs, maintenance, or renovation occur.
4. ITC eligibility for vacant portions of leased land with no construction.
Applicant’s Arguments
The applicant contended that ITC should be available because the lease of land is not “for construction” within the meaning of Section 17(5)(d) of the CGST Act. They argued that the term “for construction” applies only to goods and services directly used in construction (like cement or contractor services), not to land leasing, citing the Supreme Court judgment in CCE, Pune vs. Tata Engineering and Locomotives Ltd. The applicant asserted that Section 17(5)(c) and Section 17(5)(d) cover distinct scenarios — works contracts and other services respectively — and that land leasing should not fall under the blocked credit provisions.
