Saturday, June 20, 2020

No ITC on project development services : AAR Gujarat

The ITC shall be NOT be available on the project development services like Programme management consultancy, Marketing Consultancy, Land levelling and other related works, Roads, Water, Electricity, & Drainage Infrastructure and other related works for construction of an immovable property : AAR Gujarat


Applicant: M/s. Deendayal Port Trust 

(erstwhile Kandla Port Trust)

Facts of Case

The applicant has submitted that they have been directed by the ministry of shipping to prepare a master plan comprising future projects and for utilization of land resources with the endeavour for developing port based smart city.

Deendayal Port trust is developing one of India's first Smart Industrial Port City (SIPC) within Gandhidham-Kandla-Adipur Complex as part of the Sagarmala project.

They will auction the land under the SIPC for 60 or more years, for a consideration, in the form of one time upfront premium, liable for GST, under the category of Real Estate Service (HSN 9972).

The applicant has requested for advance ruling as to whether the "Input Tax Credit" shall be available on the following project development services like:-

 

1. Programme management consultancy;

2. Marketing Consultancy;

3. Land levelling and other related works;

4. Roads;

5. Water, electricity, & Drainage Infrastructure; and

6. Other related works for developing SIPC. 


Discussion and Findings 

We observe that the applicant is engaged in development of port based smart city i.e. Smart Industrial Port City (SIPC) within Gandhidham-Kandla Adipur Complex. The said project development is nothing but construction of an immovable property and any project development services or goods or works contract used for construction of an immovable property shall attract the provisions of clauses (c) and (d) under sub-section (5) of Section 17 of the CGST Act, which specifically deny input tax credit in respect of works contract services or goods and services used for construction of an immovable property.

Therefore the said project development services of Programme management consultancy, Marketing Consultancy, Land levelling and other related works, Roads, Water, electricity, & Drainage Infrastructure and other related works for developing SIPC are not eligible for Input Tax Credit under the CGST Act, 2017. 


Ruling

The "Input Tax Credit" shall be NOT be available under the CGST Act, 2017, on the project development services like Programme management consultancy, Marketing Consultancy, Land levelling and other related works, Roads, Water, Electricity, & Drainage Infrastructure and other related works for development of SIPC i.e. construction of an immovable property.

 

Source: AAR Gujarat

http://gstcouncil.gov.in/sites/default/files/ruling-new/GUJ_AAR_02_2020_11.03.2020_DPT.pdf

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