Recipient not eligible for ITC of GST paid on transfer of rights of leasehold land

Last updated: 03 October 2023

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The Gujarat Authority for Advance Ruling (AAR) has ruled that a company, M/s Bayer Vapi Private Limited, is not eligible to claim Input Tax Credit (ITC) for GST paid on acquiring rights to leasehold land. This is because the land was intended for the construction of a manufacturing facility, which falls under the restrictions of Section 17(5)(d) of the CGST Act. This section disallows ITC on goods and services used for constructing immovable property, even if used for business purposes.

Court :
AAR, Gujarat

Brief :
The AAR, Gujarat, in the case of M/s Bayer Vapi Private Limited [Ruling No. GUJ/GAAR/R/2023/29 dated August 24, 2023] ruled that the transferee acquiring the rights of the lease for construction of the immovable property is not entitled to take Input Tax Credit ("ITC") of the Goods and Service Tax ("GST") paid by them on the services received by the Transferor by way of the lease as per Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 ("the CGST Act").

Citation :
Ruling No. GUJ/GAAR/R/2023/29 dated August 24, 2023

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