Author: TYC

ISSUE:

Whether a shopping mall or similar leased property can qualify as "plant" under Section 17(5)(d), allowing ITC on its construction costs if it is essential to generating taxable supplies?

Whether denying ITC for leased commercial property contradicts the GST system’s goal of minimizing cascading taxes and ensuring tax neutrality?

Whether Section 17(5)(d) infringes upon Articles 14 and 19(1)(g) of the Constitution by creating arbitrary distinctions among taxpayers and restricting their right to carry on business?

RULE:

Section 17(5)(d) of the CGST Act restricts Input Tax Credit (ITC) on construction-related expenses for immovable property, even if that property is used for generating taxable supplies, such as rental income.

The restriction reflects legislative intent to prevent ITC misuse, particularly where properties are created for self-use and not further taxable supply.

The “functionality test” is a key criterion: properties integral to business operations (e.g., "plant" that directly supports taxable supply) may be eligible for ITC under Section 17(5)(d).

ISSUE:

Whether the GST paid on the Motor cars of seating capacity not exceeding 13 (including Driver) leased or rented to customers will be available to it as input tax credit in terms of Section 17(5) of Central Goods and Service Tax Act, 2017?

Whether the GST paid on the Motor cars of seating capacity not exceeding 13 (including Driver) registered as public vehicles with RTO to transport passengers provided to their different customers on lease or rental or hire will be available to it as input tax credit in terms of section 17(5) of Central Goods and Service Tax Act, 2017?

Whether the supply of services by way of renting or, leasing, or hiring motor vehicles to Special Economic Zones (SEZ) to transport the employees of the customers without payment of IGST is deemed as a taxable supply and whether ITC is admissible on motor vehicles procured and used commonly for such supply to SEZ and other than SEZ supply?

RULE:

Only when the taxable person makes a further supply of such motor vehicles with a seating capacity of less than thirteen can he claim the input tax credit.

If the person or entity is a service provider who provides service for renting/leasing motor vehicles, the taxable outward supply should include the further supply of such purchased motor vehicles to be eligible for the input tax credit.

ISSUE:

Whether input tax credit can be claimed by the applicant on procurement of gold coins, which are to be distributed to the customers at the end of the scheme period for achieving stipulated lifting or payment criteria?

Whether input tax credit can be claimed by parties that notify other schemes with similar conditions?

RULE:

Input tax credit is not available for gifts or rewards without consideration even though they were given for sales promotion as they do not qualify as inputs for the purpose of credit since no GST is paid on its disposal.

ISSUE:

Whether the GST paid on services used by a party for maintenance of their township, security services and horticulture can be claimed as input tax credit?

RULE:

To claim input tax credit, an input service must be integrally connected with the business of manufacturing the final product. The cost of an input service forming part of the cost of the final product alone cannot be a condition to allow the benefit of an input tax credit.