Regarding itc

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 July 2017 HELLO
This is Narayana Malleesh

I am a Ca final student and currently working as an Accounts in charge in a pvt company
The company is engaged in providing works contract services in relation to tall civil structures especially in CONSTRUCTION OF COOLING TOWERS of thermal power plants in INDIA across many states on sub contract basis from large companies such as TATA ,L&T ETC .

the company is offered to cpmplete the several works relation to the tall cooling structure such as tilling the soil ,construction of the cooling tower ,painting ,erection of small structures etc which are inherent part of structure.

The contractee supplies goods such as cement ,steel and other services such as electricity and water at free cost and the contractor shall purchase metal sand and other consumables,mobilise labour technical engineers and other personell used for the completion of structure.

Based on the above details i have arrived to a conclusion that the activity performed by the company falls under sec 2 sub sec 119 of GST Act and shall be treated as composite supply as per schedule II .

My doubt is regarding the eligibility of the company to claim input tax credit on the input goods and manpower services .
As i go through sec17 sub sec 5 clause (c) conditions for availing input tax credit i understood that since the company is engaged in providing works contract services as per sec 2 (119) the company is NOT eligible to take input tax credit on procurements or materials used(consumables) , transfered( sand steel metals etc).

I kindly request you to evaluate the scenario and reply whether I stood correct in interpreting the provisions of the act for this business and please correct me where ever required

Amol S Joglekar

Amol S Joglekar (Expert)
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01 July 2017 your contention is right.......No ITC.
just a small doubt....you said contractee supplies the material like cement, steel etc free of cost....... then where comes the question of ITC in relation to this?
For the rest, your contention is right

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 July 2017 Your interpretation is wrong ITC can be claimed.
The company is eligible to claim input tax credit on the input goods and manpower services. .
See the GST schedule of rates for services.
27.Composite supply of Works contract as defined in clause 119 of section 2 of CGST Act
18% GST With Full ITC

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Querist : Anonymous

Querist : Anonymous (Querist)

01 July 2017 @Amol sir i have just given the idea of procedure and i knew that no input tax credit is available on free issue items from contractee