Page 165 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : VIKRAM TRADERS 491
(a) Inward supplies relating to construction of building (i.e. construc-
tion service provided by builders, developers & contractor);
(b) Inward supplies relating to goods & services, which are directly
used for construction of building;
(c) Inward supplies relating to expenses in the form of repairs &
maintenance, additions, alterations etc., which are capitalized in the
books of accounts; and
(d) Inward supplies relating to expenses in the form of repairs &
maintenance, additions, alterations etc., which are not capitalised in
the books of accounts.
3. In view of the above, the applicant sought advance ruling in respect
of the following question :
“Eligibility to claim input tax credit on inputs attributable to the renting
of immovable property”
4. Applicant’s interpretation of Law :
4.1 The applicant, quoting Section 9 of CGST Act, 2017, the charging
section, states that renting of immovable property is a taxable service and attract
18% of GST and Section 16 of the CGST Act, 2017 specifies the eligibility and
conditions for taking input tax credit.
4.2 The applicant quotes definitions of ‘input’ u/s 2(59), ‘input service’
u/s 2(60), ‘capital goods’ u/s 2(19), ‘input tax’ u/s 2(62), ‘input tax credit’ u/s
2(63) and also Section 41 of the CGST Act, 2017 which deals with claim of input
tax credit and provisional acceptance thereof, states that a taxable person who is
liable to pay output tax is eligible to set off available input tax credit on inputs
which are used or intended to be used in the course of or furtherance of business
subject to restrictions specified u/s 17 of the said Act.
4.3 The applicant further quotes Section 17(5) of the said Act and states
that Section 17(5)(c) & (d) stipulates that input tax credit is not eligible on inputs
attributable to the construction of an immovable property, which are not sold or
intended for sale before issuance of completion certificate. However, this re-
striction is not applicable where the immovable property is constructed for the
purpose of letting out of the same, as the tax chain is not broken and, on the con-
trary, the construction of the building will results in a fresh stream of GST reve-
nue to the exchequer on the rentals generated by the building. The denial of ITC
in such a situation would be completely arbitrary, unjust and oppressive and
would be directly opposed to the basic rationale of GST itself, which is to prevent
the cascading effect of multi-stage taxation and the inevitable increase in costs
which would have to be borne by the customer.
4.4 The applicant further states that denial of ITC in respect of a build-
ing meant & integrated to be let out would amount to treat it as identical to a
building which is meant & intended to be sold. Differentiating ITC for two dif-
ferent types of building as one for the purpose of GST as itself contrary to the
basic principles regarding classification of subject matter for the levy of tax and,
therefore, violative of Article 14 of the Constitution, which specifies that laws
inconsistent with or derogation of the fundamental rights shall, to the extent of
such inconsistency, be void.
4.5 Applicant submits that denial of ITC is also violative of fundamen-
tal right to carry on business under Article 19(1)(g) of the Constitution, that all
GST LAW TIMES  23rd April 2020  285