GNAL is not entitled to claim Input Tax Credit of the GST paid on the services provided by GACL in the form of agreeing to surrender/ relinquish its rights in the leasehold property.
Input tax credit— Section 17(5) of CGST Act— In the instant case, M/s GACL-NALCO Alkalies & Chemicals Private Limited is a joint venture of M/s. Gujarat Alkalies and Chemical Limited and National Aluminium Company Limited. GNAL is engaged in the production of caustic soda and submits that it is developing a Greenfield project of caustic soda plant.
Question on which advance ruling is sought is as follows—
Whether GNAL is entitled to claim Input Tax Credit of the GST paid on the services provided by GACL in the form of agreeing to surrender/ relinquish its rights in the leasehold property in favour of GNAL?
Held that— This authority the Ruling based on the following five grounds:
i. The expression ‘plant and machinery’ excludes land. As expounded at para 13 of this Ruling, with this expression of Plant and Machinery excluding land, explicitly incorporated in the Blocked Credit section 17(5) CGST Act, We hold that Legislature has expressed its intent that ITC shall not be available in respect of services pertaining to land received by a taxable person for construction of an immovable property including when such services are used in the course or furtherance of business.
ii. The word used by the Legislature in Section 17(5)(d) CGST Act is ‘for’ and not ‘used’, thereby the intention of Legislature was to block the credit of subject lease service received by Taxable person for construction of immovable property.
iii. GST Council is seized of the matter that GST borne by a Taxable Person on such leasing is not available for construction of immovable property.
GNAL is not entitled to claim Input Tax Credit of the GST paid on the services provided by GACL in the form of agreeing to surrender/ relinquish its rights in the leasehold property.
Input tax credit— Section 17(5) of CGST Act— In the instant case, M/s GACL-NALCO Alkalies & Chemicals Private Limited is a joint venture of M/s. Gujarat Alkalies and Chemical Limited and National Aluminium Company Limited. GNAL is engaged in the production of caustic soda and submits that it is developing a Greenfield project of caustic soda plant.
Question on which advance ruling is sought is as follows—
Whether GNAL is entitled to claim Input Tax Credit of the GST paid on the services provided by GACL in the form of agreeing to surrender/ relinquish its rights in the leasehold property in favour of GNAL?
Held that— This authority the Ruling based on the following five grounds:
i. The expression ‘plant and machinery’ excludes land. As expounded at para 13 of this Ruling, with this expression of Plant and Machinery excluding land, explicitly incorporated in the Blocked Credit section 17(5) CGST Act, We hold that Legislature has expressed its intent that ITC shall not be available in respect of services pertaining to land received by a taxable person for construction of an immovable property including when such services are used in the course or furtherance of business.
ii. The word used by the Legislature in Section 17(5)(d) CGST Act is ‘for’ and not ‘used’, thereby the intention of Legislature was to block the credit of subject lease service received by Taxable person for construction of immovable property.
iii. GST Council is seized of the matter that GST borne by a Taxable Person on such leasing is not available for construction of immovable property.