ITC on Inward Supply of Goods or Services Used for Construction of Warehouse is not Available Even if it is Leased: AAR

Case Details: Authority for Advance Rulings, West Bengal Mindrill Systems And Solutions (P.) Ltd., In re - [2023] 152 taxmann.com 274 (AAR-WEST BENGAL)

Judiciary and Counsel Details

• • Sarthak Saxena & Joyjit Banik, Member
  • Anil Dugar, Adv. for the Applicant.

Facts of the Case

The applicant was engaged primarily in the business of manufacturing of pneumatic rock drills, jack hammers, equipment, spare parts and accessories used in mining/construction industry. It decided to construct warehouse with sole intention to provide the same on rent. It filed an application for advance ruling to determine whether credit would be allowed on input/input service used for construction of warehouse in case such construction expenses would not be capitalized in books.

AAR Held

The Authority for Advance Ruling observed that Section 17(5)(d) of CGST Act, 2017 denies ITC in respect of inward supplies received to construct immovable property for ‘own use’ by taxable person. In the present case, the warehouse would be constructed by applicant which would involve cement, marble, paver block etc. and it would not be moved after construction without damage. Therefore, the ITC of GST charged on inward supply of goods and services related to construction of warehouse which shall be capitalized in books of accounts would not be available. However, the ITC would be available if such expenses shall not be not capitalized in books.