Page 31 - GSTL_16th July 2020_Vol. 38_Part 3

2020 ] BLOCKED CREDITS IN RESPECT OF WORKS CONTRACT SERVICES UNDER GST LAW J73
only be decided after ensuring that the further supply of works con-
tract service is made by the applicant on a case to case basis.”
Conclusion
Thus, ITC is not allowed in terms of Section 17(5)(c) and (d) of the CGST
Act, in respect of works contract services when supplied for construction of im-
movable property (other than plant and machinery) except where it is input ser-
vice for further supply of works contract service and goods or services received
by a taxable person for construction of an immovable property (other than plant
and machinery) on his own account including when such goods or services are
used in the course or furtherance of business. As per definition of ‘works con-
tract’ there are 14 types of activities relating to works contract and out of which
certain services are post construction services which are required after comple-
tion of construction of a building or emerge of an immovable property. It is need-
less to say Section 17(5)(c) & (d) deny ITC on inputs and input services only
where construction resulted in existence of an immovable property but cannot be
stretch to deny availment of ITC on post construction activities. It is to be men-
tioned that in spite of landmark judgment of Hon’ble Orissa High Court in the
case of Safari Retreats Private Limited, that many of advance rulings that have de-
nied ITC under sub-sections (c) & (d) of Section 17(5) of the CGST Act, in respect
of works contract services. It is hoped that the dispute of ITC on works contract
services will be amicably decided in the favour of assessees in the appellate fora
or at higher judicial forum.
_______

[Continued from page J68]

Precautions
In order to forestall objections from the GST department and sidestep
any future allegation of non-disclosure, the following steps are advisable;
• a letter to be written to the jurisdictional GST officer at both ends in-
forming them of the factual position of closure of the branch and
transfer of credit. This will ward off penalties based on non-
disclosure. It may also be clarified that the new branch will be ac-
countable to meet all liabilities of the branch that has been closed.
• The credit thus transferred is to be kept unutilised; in such a case
there will be no interest on it even if finally held to be ineligible
[Section 50(3) read with Sections 42(10) and 43(10)].
It may be noted that if the credit is not transferred at the time of closure of the
branch, it is irretrievably lost.
_______

GST LAW TIMES  16th July 2020  31