Where the contractor has provided works contract service for repairs, renovations & rehabilitation, ITC can't be availed by Housing Society

In M/s Mahavir Nagar Shiv Srushti Co-operative Housing Society Ltd. [GST-ARA-19/2021-22/B-94 dated November 10, 2021] Hon'ble Maharashtra Authority for Advance Ruling ("MAAR") held that repairs, renovations & rehabilitation services provided by housing society to its members does not fall under the category of works contract services and is therefore not entitled to claim Input Tax Credit ("ITC") under the provision of Section 17(5)(c) of the Central Goods and Services Tax Act, 2017 ("the CGST Act").

M/s Mahavir Nagar Shiv Srushti Co-operative Housing Society Ltd. ("the Applicant") has sought an advance ruling, that if activities of the Applicant are treated as supply under the CGST Act than whether the Applicant is entitled to claim ITC on input and inputs services for repairs, renovations & rehabilitation work done for the members.

The applicant submitted that he used the work contract services provided by M/s Unique Rehab Pvt. Ltd. ("the Contractor") to provide further work contract services to the members of the society and hence is entitled to claim ITC of the GST paid to the contractor.

MAAR observed that, a housing society is a collective body of persons, who stay in a residential society and provides various services to its members like maintenance of the building, repairs, collecting dues etc.

Held that, the Applicant in the present case is making provision of facilities/benefits to its members and is not providing any works contract services to its members, as submitted by the Applicant.

Further held, that the Applicant is not entitled to claim ITC under the provision of Section 17(5)(c) of the CGST Act where the contractor has provided works contract service for repair, renovation and rehabilitation works. 

Our Comments

As per Section 17(5)(c) and (d) read with explanation there are only two possibilities where the assessee can avail ITC. First, as per exception clause under Section 17(5)(c) where works contract service are supplied to the assessee who himself is in business of providing such service, therefore as per this provision housing society would not be entitled to claim ITC as it may in business of providing club and association services to its members but is not in business of providing works contract services.

Second, as per explanation mentioned therein, the meaning of construction has to be construed to the extent of capitalization, thus, it can be said that ITC can be claimed for construction services availed which are not capitalized in the books of accounts.