Section 17(5) of the Central Goods and Services Act, 2017 provides that input tax credit in respect of the following shall not be available-
(a) motor vehicles and other conveyances except when they are used-
(i) for making the following taxable supplies, namely-
(A) further supply of such vehicles or conveyances; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
(b) the following supply of goods or services or both-
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where-
(A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and
(C) travel benefits extended to employees on vacation such as leave or home travel concession;
(c) works contract services when supplied for construction of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant and machinery) on his own account including such goods or services or both are used in course of furtherance of business;
(e) goods or services or both on which tax has been paid under Section 10 (Composition scheme);
(f) goods or services or both received by a non resident taxable person except on goods imported by him;
(g) goods or services or both used for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
(i) any tax paid in accordance with the provisions of Section 74, 129 and 130-
Section 74 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of fact;
Section 129 deals with the detention, seizure and release of goods and conveyances in transit and the tax paid in this procedure;
Section 130 deals with the confiscation of goods or conveyances and levy of penalty.
Construction
The explanation to Section 17(5) (d) defines the term ‘construction’ as including re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.
Plant and machinery
The explanation to Section 17(5) defines the term ‘plant and machinery’ as apparatus, equipment and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-
land, building or any other civil structures;
telecommunication towers; and
pipeline laid outside the factory premises.
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