ITC disallowed U/S.17(5) on Cement & MS rods

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A business received a Show Cause Notice (SCN) for FY 2017-18, disallowing Input Tax Credit (ITC) on cement and MS rods, despite these items being sold and tax paid. The query seeks guidance on how to proceed, particularly regarding the SCN's timeliness. The content clarifies that GST paid on construction materials like cement, MS rods, bricks, and sand is blocked under Section 17(5)(d) when used for immovable property, even for business purposes.

Mahabir Prasad Agarwal

Mahabir Prasad Agarwal (Querist)

16 March 2024 Received a SCN U/S.74 dt.14.12.2023 for FY 2017-18 disallowing ITC on purchase of cement and MS rods. Although cement and ms rods were sold by us and outpaid paid on the same. How to proceed into the matter ? Is the said SCN issued within limitation period ?

RAJA P M

RAJA P M (Expert)

16 March 2024 Reply as it's our business transaction...

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

16 August 2025 Add-on: Please note that GST paid on cement, TMT/MS rods, bricks, sand, installation services, and other construction materials is specifically blocked under Section 17(5)(d). Since these are used to construct or enhance immovable property, the ITC is not allowed—even if the property is used for business purposes.

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