ITC under construction service

interpretation and litigation matter. to my knowledge it should be allowed

Pl read my article available at https://www.caclubindia.com › Articles › GST

This article covers such situations. you can also search this article on google chrom under heading 'construction service and itc'

@ Ramesh kumar Singla..

sir, the another interpretation which i get is that,

according to 17(5)(c) the credit is not available except it is used for further supply of works contract service,

now, according to 2(119) the definition of works contract service includes the construction of immovable property i.e. builders..

so, by combine reading of the same, can we conclude that the same has been available to builders..??

@ Ramesh kumar Singla..

sir, the another interpretation which i get is that,

according to 17(5)(c) the credit is not available except it is used for further supply of works contract service,

now, according to 2(119) the definition of works contract service includes the construction of immovable property i.e. builders..

so, by combine reading of the same, can we conclude that the same has been available to builders..??

In my article, i have taken into consideration the definition of WC in section 2(119). This definition covers 14 activities which are to be treated as WC when the transfer in property in the goods is also involved. Construction is one of these 14 activities. So, Construction activity is also WC when there is supply of goods involved. In the construction of building/flats, the transfer of goods is always involved and consequently, all services of construction supplied by the builder are WC. If so, then all such WC pertaining to construction are covered within the scope of section 17(5)(c) debarring the builder from  taking input credit.

Also, if your construction service falls within sub-item (b) of item 5 of Schedule II of the Central Goods and Services Tax Act, it has been specified as per Notification No. 15/2017-Central Tax (Rate) dt 28th June, 2017, that no refund of unutilised input tax credit shall be allowed in such cases.