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CA SHIVANG SONI (CHARTERED ACCOUNTANT) (266 Points)

17 December 2017

As per govt notification dated 22.8.17 govt work contract required to collect and pay gst @ 12 n 18%. Municipal corporation has given work contract of 10 lacs for road repair. Now contractor has put bill of 10lac + 12% gst. Corporation has paid it and filed return and get credit for the same, also service provide by municipal corporation is exempt. My question is that municipal corporation cailm refund of such credit ? as all services provide by municipal corporation is exempt

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Vishesh Ladda (Student CA IPC / IPCC) (7 Points)
Replied 17 December 2017

As per my knowledge,
No, Municipal Corporation cannot take refund of such ITC. As per Section 54 read with Rule 89 and Rule 96 of CGST Rules, you can take refund only in 2 cases. Either Zero rated supply or Inverted Tax Structure.
As services by Municipal corporation are exempt, it is not able to take ITC as per Section 17 of CGST Act. Amount of ITC will be expense for Municipal Corporation.

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