Shri Satya Dev Bommi reddy

GST AAAR28 Apr 2022Order-in-Appeal No.AAAR/03/2022

What the court decided

AI extract

Issue for consideration

Whether services availed by an appellant for purchasing an under-construction commercial immovable property fall under Clause 5(b) or Clause 6(a) of Schedule-II of the CGST Act, 2017. +3 more

A compact analysis

This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.

A compact analysis

Question Raised	Advance Ruling Issued
1. Given that the supply of under construction of immovable property is specifically defined as a separate and distinct service under clause 5(b) of Schedule II of CGST Act, can the same be treated to be referring to either the supplies or transactions described in 17(5)(c) or 17(5)(d) of CGST?	Clause 5(b) of Schedule II and Sec 17(5)(c) are two different and distinct provisions of CGST Act, 2017.
2. Given that the supply of lease of immovable property is specifically defined as a separate and distinct service under clause 2(b) of Schedule II of CGST Act, can the same be treated to be referring to either the supplies or transactions described in 17(5)(c) or 17(5)(d) of CGST?	Clause 2(b) of Schedule II and Sec 17(5)(c) are two different and distinct provisions of CGST Act, 2017.
3. Given that the Applicant is in the business of lease of immovable property, does the term _“works contract services when supplied for”_in s.17(5)(c) of CGST Act refer to output supply of lease of immovable property or to the input receipt (purchase of under construction commercial immovable property) of the Applicant?	Sec 17(5)(c) is enacted with reference to restriction of ITC to works contract services. Works contract is defined under Sec 2(119).
4. Is supply of “under construction commercial immovable property” under an indivisible contract without explicit purchase of goods and/or services therein, a contract of “works _contract”_within the meaning of s.17(5)(c) of CGST Act?	Sec 17(5)(c) of CGST Act, 2017 pertains to all transactions defined under Sec 2(119).
5. Does the term “Goods or Services or both received” in s.17(5)(d) of CGST Act refer to output supply (lease of immovable property) or to the input receipt (purchase of under construction commercial immovable property) of the taxable person (Applicant)?	Sec 17(5)(d) of CGST Act, 2017 refers to inputs on which ITC is not available for any taxable person.
6. Does the term_“for construction of an_ _immovable property on his own account”_in s.17(5)(d) of CGST Act refer to output supply (lease of immovable property) or to the input receipt (purchase of under construction commercial immovable property) of the taxable person(Applicant)?	Sec 17(5)(d) of CGST Act, 2017 refers to inputs on which ITC is not available for any taxable person.
7. If the term “Goods or Services or both received” in s.17(5)(d) of CGST Act refer to input received, then can the meaning of the term “for construction of an immovable property on his own account_”_in s.17(5)(d) of CGST Act include the business of the Applicant herein, i.e. for the lease of immovable property?	If the applicant utilizes goods or services or both for construction of immovable property on his own account then the Sec 17(5)(d) is applicable with respect to purchase of goods or services or both.

Question Raised

Advance Ruling Issued

1. Given that the supply of under construction
of immovable property is specifically defined as a
separate and distinct service under clause 5(b) of
Schedule II of CGST Act, can the same be treated
to be referring to either the supplies or
transactions described in 17(5)(c) or 17(5)(d) of
CGST?

Clause 5(b) of Schedule II and
Sec 17(5)(c) are two different and
distinct provisions of CGST Act,
2017.

2. Given that the supply of lease of immovable
property is specifically defined as a separate and
distinct service under clause 2(b) of Schedule II
of CGST Act, can the same be treated to be
referring to either the supplies or transactions
described in 17(5)(c) or 17(5)(d) of CGST?

Clause 2(b) of Schedule II and Sec
17(5)(c) are two different and
distinct provisions of CGST Act,
2017.

3. Given that the Applicant is in the business of
lease of immovable property, does the term
_“works contract services when supplied for”_in
s.17(5)(c) of CGST Act refer to output supply of
lease of immovable property or to the input
receipt
(purchase
of
under
construction
commercial
immovable
property)
of
the
Applicant?

Sec 17(5)(c) is enacted with
reference to restriction of ITC to
works contract services. Works
contract is defined under Sec
2(119).

4. Is supply of “under construction commercial
immovable
property”
under
an
indivisible
contract without explicit purchase of goods
and/or services therein, a contract of “works
_contract”_within the meaning of s.17(5)(c) of CGST
Act?

Sec 17(5)(c) of CGST Act, 2017
pertains to all transactions defined
under Sec 2(119).

5. Does the term “Goods or Services or both
received” in s.17(5)(d) of CGST Act refer to output
supply (lease of immovable property) or to the
input receipt (purchase of under construction
commercial immovable property) of the taxable
person (Applicant)?

Sec 17(5)(d) of CGST Act, 2017
refers to inputs on which ITC is not
available for any taxable person.

6. Does the term_“for construction of an_
_immovable property on his own account”_in
s.17(5)(d) of CGST Act refer to output supply
(lease of immovable property) or to the input
receipt
(purchase
of
under
construction
commercial immovable property) of the taxable
person(Applicant)?

Sec 17(5)(d) of CGST Act, 2017
refers to inputs on which ITC is not
available for any taxable person.

7. If the term “Goods or Services or both
received” in s.17(5)(d) of CGST Act refer to input
received, then can the meaning of the term “for
construction of an immovable property on his
own account_”_in s.17(5)(d) of CGST Act include
the business of the Applicant herein, i.e. for the
lease of immovable property?

If the applicant utilizes goods or
services or both for construction of
immovable property on his own
account then the Sec 17(5)(d) is
applicable
with
respect
to
purchase of goods or services or
both.

8. Can purchase of “under construction commercial immovable property” under an indivisible contract without explicit purchase of goods and/or services therein, be termed as a contract for supply “for construction of an immovable property on his own account_”_within the meaning of s.17(5)(d) of CGST Act, given that the business of the Applicant is lease of immovable property and not construction of immovable property?	No. This transaction falls within the scope of Sec 17(5)(c).
9. Regardless of its applicability to the case of the Applicant herein, given the numerous clarifications and notifications by the Dept of Revenue that clearly states that input credit is available for the sale of under construction commercial complexes sold before the issuance of the completion certificate, is not the Authority now precluded from taking a different stand?, since: _(a) _it is against the principle of contemporanea expositio and	The applicant has not brought to the notice of the authority any such specific clarifications on Notifications. 9a. No.
_(b) _they are bound by such executive constructions as well as rules of executive estoppel.	9b. No.
10. Is not purchase of “under construction commercial immovable property” under an indivisible contract without explicit purchase of goods and/or services therein, a valid and legitimate input required for the business of the Applicant i.e. lease of immovable property?	As discussed in detail above, the answer to this question is No.
11. Given that the Applicant’s Vendor (Sohini Developers LLP) has taken the input tax credit of the GST paid by the Applicant, what specific law/rule prevents the flow of that tax and excludes the Applicant from doing the same against the GST received for leasing of his immovable property?	Sec 17(5)(c) clearly answers this question.
12. Is the Applicant eligible and entitled to claim input tax credit of GST paid to his Vendor for the purchase of under construction commercial immovable property, given he used the same to provide the supply of lease of commercial property, and adjust the same against the rental GST to be paid by him for the supply of lease of immovableproperty?	As discussed in detail above, the answer to this question is No.

8. Can
purchase
of
“under
construction
commercial
immovable
property”
under
an
indivisible contract without explicit purchase of
goods and/or services therein, be termed as a
contract for supply “for construction of an
immovable property on his own account_”_within
the meaning of s.17(5)(d) of CGST Act, given that
the business of the Applicant is lease of
immovable property and not construction of
immovable property?

No. This transaction falls within
the scope of Sec 17(5)(c).

9. Regardless of its applicability to the case of
the
Applicant
herein,
given
the
numerous
clarifications and notifications by the Dept of
Revenue that clearly states that input credit is
available for the sale of under construction
commercial complexes sold before the issuance of
the completion certificate, is not the Authority
now precluded from taking a different stand?,
since:
_(a) _it is against the principle of contemporanea
expositio and

The applicant has not brought to
the notice of the authority any
such
specific
clarifications
on
Notifications.
9a. No.

_(b) _they
are
bound
by
such
executive
constructions as well as rules of executive
estoppel.

9b. No.

10. Is not purchase of “under construction
commercial
immovable
property”
under
an
indivisible contract without explicit purchase of
goods and/or services therein, a valid and
legitimate input required for the business of the
Applicant i.e. lease of immovable property?

As discussed in detail above, the
answer to this question is No.

11. Given that the Applicant’s Vendor (Sohini
Developers LLP) has taken the input tax credit of
the GST paid by the Applicant, what specific
law/rule prevents the flow of that tax and
excludes the Applicant from doing the same
against the GST received for leasing of his
immovable property?

Sec 17(5)(c) clearly answers this
question.

12. Is the Applicant eligible and entitled to claim
input tax credit of GST paid to his Vendor for the
purchase of under construction commercial
immovable property, given he used the same to
provide the supply of lease of commercial
property, and adjust the same against the rental
GST to be paid by him for the supply of lease of
immovableproperty?

As discussed in detail above, the
answer to this question is No.

Shri Satya Dev Bommi reddy

What the court decided

A compact analysis

Issues for consideration

Cases cited

Parties & counsel

Coram

Case details

Similar cases

Shri Satya Dev Bommi reddy

What the court decided

A compact analysis

Issues for consideration

Cases cited

Parties & counsel

Coram

Case details

Similar cases

Statutes considered