Input tax credit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 September 2017 There is some confusion regarding admissibility of ITC in the case of Works Contract Services for construction of a building provided by the builders/contractors due apparent bar of such credit in section 17(5)(c) of CGST Act. The construction services provided by the builders result into immovable property and also these are not input service for further supply of WC service. The revenue officers have released press statements stating that the ITC is admissible. However, the language used in the above mentioned section appears to deny such credit. The departmental officers or CERA officers may issue SCNs for wrongful availment of credit. The courts decide the intention of the law makers from the language used in the provision of law and not from the intention of the revenue officers.Pl clarify what should be done by a builder?

Amol S Joglekar

Amol S Joglekar (Expert)
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01 October 2017 builder can claim ITC for such building contract services.

Querist : Anonymous

Querist : Anonymous (Querist)

01 October 2017 What about the restriction in section 17 (5)(c)? It bars such credit.

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Amol S Joglekar

Amol S Joglekar (Expert)
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02 October 2017 which sentence/word/line of the said section is bothering you? can you please send it?

Querist : Anonymous

Querist : Anonymous (Querist)

03 October 2017 sir, section 17(5)(c) provides that ITC is not available when WC services are supplied for construction of immovable property. The builders are supplying WC services for construction of immovable property ie building/flats and therefore, appear to be barred from availing credit. Pl clarify.

Amol S Joglekar

Amol S Joglekar (Expert)
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03 October 2017 builder is NOT supplying works contract service....in fact builder is receiving works contract service from various people like masonry, brick bat fitting, skirting, painting, door fittings, electrification and so on....

Querist : Anonymous

Querist : Anonymous (Querist)

03 October 2017 Sorry sir i am bothering you. I believe, builders too supply WC and that is why they have been paying service tax and VAT in the pre-GST regime. In the GST regime also, the builders supply WC when consideration is received before issuance of completion certificate. According to you if builders are not supplying WC in the GST regime, then they should not pay any GST but they are paying GST under WC SERVICE supply.

Amol S Joglekar

Amol S Joglekar (Expert)
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04 October 2017 No, no...you are NOT bothering me.....
Builder is manufacturing rather than giving service.

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