Advance Ruling no :KAR_AAR_08_2020 dated 10.03.2020 M/S Vikram Traders Author’s Message
This advance ruling does not focus on findings and conclusions of the Authority of Advance Ruling (AAR) but the aim of this document is to light up the provisions of Section 97 & 98 of CGST Act 2017 which states the ultimate objectives of providing Advance rulings under the GST regime and the cases in which advance ruling cannot be provided by the Authority. As we are on our way to gain some knowledge in relation to preparation of Advance Rulings under GST, it becomes vital to consider the cases in which advance rulings cannot be delivered by the authority before filling an application of advance ruling and we should also keep in mind the ultimate objective of the dept behind the setup up of Authority of Advance Ruling in the act and such objective should not be beaten in your application. This case is a perfect example to exhibit the above scenarios.
Facts of the case
Vikram Traders is engaged in the business of Renting of immovable property and has procured Inward supplies relating to construction of building, Inward supplies relating to expense of Repair & Maintenance which are either capitalized in the books or accounts or not capitalized in the books of accounts.
The concern of the applicant is “Whether he is eligible to claim input tax credit on inputs attributable to renting of immovable property”.
In this case, the applicant quotes various facts like section 17(5) of the CGST Act 2017which states that Input tax credit is not eligible on inputs attributable to the construction of an immovable property, which are not sold or intended for sale before issuance of completion certificate.
However, this restriction is not applicable where immovable property is constructed for the purpose of letting out of the same.
The applicant also presented the fact that the denial of ITC, in this case, would oppose the basic rationale of GS, which is to prevent the Cascading Effect and this would ultimately increase the cost of the product to be borne by the customer.
The applicant relied on the decision of Hon’ble Orissa High court in case of M/S Safari Retreats Pvt Ltd in which it was held that the provisions in section 16(1) &(2) and section 17 (1),(2) & (5) is frustrating the objective of the act due to which taxpayers has pay huge amount of tax.
Findings & Discussion
The Authority of Advance Ruling Rejected the application as the case law backed by the applicant i.e Safari Retreats Pvt Ltd is subject to an appeal filled by the Department before Hon’ble Supreme court of India and as per section 98(2) of CGST Act 2017, “Application for Advance Ruling shall not be admitted in cases where the question raised in the application is already pending in case of the applicant under any of the provisions of CGST Act.
Find the original Advance Ruling at : https://drive.google.com/open?id=16obsDU-twNsnVIpcsGpgRny3Nfv_I4Ea
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