The petition was filed before the Madhya Pradesh High Court contending the eligibility to avail ITC on Leasing Out Building Running School.
The bench of Justice Vivek Rusia and Justice Binod Kumar Dwivedi has directed the petitioner to avail the statutory remedy, effect of judgement of the Supreme Court in Safari Retreat has also been examined.
Table of Contents
Background
The petitioner/assessee is in the business of construction of building and rental “Rental or leasing services involving own or leased non-residential property”. The petitioner has constructed a building on own land for the purpose of giving it on lease to M/s Shishukunj Knowledge Society for running a school.
For the purpose of construction of building, various goods namely bricks, cement, electrical equipment, hardware, RMC, sanitary, steel, stone, tile, sand, paint, doors etc. were purchased.
The petitioner availed the Input Tax Credit (ITC) charged on the purchase/supply of the aforesaid goods consumed and used in the construction of the said school building.
The petitioner received summon dated 11.2.2022 and 18.2.2022 from the office of Directorate General of GST Intelligence for production of account statements, details of ITC availed, reconciliation sheet for outward supply, ITC availed and ITC utilized.
In compliance of the aforesaid summon, Shri Anil Kumar Somani, GM Accounts appeared and recorded his statement and the petitioner was made to reverse the ITC availed on civil work through DRC-03 on the same day. The petitioner reversed the ITC under protest to the tune of Rs.6,68,44,378/- of the financial year 2019-20, 2020-21 and 2021-22. Thereafter, the petitioner was served with the letter dated 21.2.2023 for payment of penalty and interest at the rate applicable on Rs.6,68,44,378/-.
In compliance of the said summon, the statement of CEO of the petitioner was recorded on 9.3.2023. Petitioner submitted a detailed reply to the show-cause notice objecting the recovery of GST.
In apprehension of the adverse order being passed by the respondent, the petitioner rushed to this Court by filing this petition stating that the petitioner is entitled to avail the Input Tax Credit under Section 17(5)(c) & (d) of the CGST Act.
The matter of M/s Safari Retreats Private Ltd. is relating to the construction of the mall. The Apex Court has held that each mall is different, therefore, in each case fact finding enquiry is contemplated.
The High Court has not decided whether the mall in question will satisfy the functionality test of being a plant. The matter has been remanded back to decide, whether, on facts, the mall in question satisfies the functionality test so that it can be termed as a plant within the meaning of bracketed portion in Section 17(5)(d). The same applies to warehouses or other buildings except hotels and cinema theatres. The Apex Court has held that if the building in which the premises are situated qualifies for the definition of plant, ITC can be allowed on goods and services used in setting up the immovable property, which is a plant.
Conclusion – ITC On Leasing Out Building
The court has held that the petitioner was required to satisfy adjudicating authority, whether the building in question qualifies for the definition of plant in order to avail the ITC, but the petitioner instead of submitting all these necessary documents chosen not to appear before the authority and directly approached this Court.
The court said that the petitioner is having remedy to file an appeal against the order. The petitioner is free to file an appeal before the appellate authority, wherein the petitioner may file all the necessary documents and rely on the law laid down by the Apex Court in the case of M/s Safari Retreats Private Ltd.
Read More: State GST Officers Not Adjudicating Authority: Allahabad High Court Grants Interim Stay
FAQs
Is there GST ITC On Leasing Out Building For Running School?
The bench of Justice Vivek Rusia and Justice Binod Kumar Dwivedi has directed the petitioner to avail the statutory remedy, effect of judgement of the Supreme Court in Safari Retreat has also been examined.
Case Details
Case Title: M/S Chirantan Enterprises Llp Through Partner Mr. Prem Sethia Versus Commissioner Cgst And Central Excise
Case No.: WRIT PETITION No. 29788 of 2024
Date: 15 th OF OCTOBER, 2024
Counsel For Petitioner: Nitin Singh Bhati
Counsel For Respondent: Prasanna Prasad
