Input tax credit— Section 17(5) of CGST Act— In the instant case, the applicant is a Rajasthan State Government owned Public Sector Undertaking.

The Applicant is a registered person under GST for the purpose of providing various taxable and exempt outward supplies of leasing of Industrial and Non-Industrial Plots as well as financing activities of providing term loan to various projects.

It has been setup by the Rajasthan Government for the purpose of development of various industrial areas for the purpose of setting up of Industries and other supportive services in the state of Rajasthan.

QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT

1. Whether the Applicant can claim the ITC on the Input services of construction or works contract procured for the development of an Industrial area or the special maintenance expenses of the area??

2. If the answer of question No. 1 is affirmative then what would be the mechanism for apportionment of ITC between exempt and taxable supplies as in an industrial area, long term leasing of 'industrial plot' of land is exempt under N. No. 12/2017-Central Tax(Rate) but leasing of 'nonindustrial plot' of land/commercial plot of land is a taxable supply?

Section 17(5)(c) and (d) of the CGST Act, 2017 denies availment of ITC on works contract service and on goods and services when supplied for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the furtherance of business. Applicant does not deny that the civil work i.e. roads drainage, approaches, culverts, rain water harvesting system, power supply related work like laying of new power lines, street light work, work for common facilities in the industrial area like Administrative office, building for fire tenders, Post office/Bank building etc. is an immovable property.

Held that— 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 long term leasing 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.