ITC Can't Be Availed By Housing Society On Works Contract Services Of Repairs, Renovations, Rehabilitation: AAAR

The Maharashtra Appellate Authority of Advance Ruling (AAAR) has ruled that the housing society is ineligible to claim input tax credit (ITC) on contract services received from their appointed contractor due to the housing society's ineligibility to claim ITC on repairs, renovations, and rehabilitation works.

The two-member bench of Ashok Kumar Mehta and Rajeev Kumar Mital has observed that the society itself is not a work contract service provider, nor is it in the business of providing work contract services. The contract services received by society from appointed contractors are for the common benefit of the members.

The appellant is a co-operative housing society registered under the Maharashtra State Co-operative Societies Act, 1960. The appellant society has constructed a building on the plot allotted by MHADA.

The Appellant Society charges its members with property taxes, water charges, common electricity charges, contributions to repairs and maintenance funds, expenses on repairs and maintenance of the lifts of the society, service charges, car parking charges, etc.

The appellant has sought an advance ruling on the issue of whether the applicant is eligible to claim the ITC on input and input services of repairs, renovations, and rehabilitation works carried out by the applicant.

The AAR held that the appellant society is not eligible for ITC in view of the restrictions imposed under Section 17(5)(c) of the CGST Act, 2017.

The appellant contended that the appellant society should be eligible to claim ITC on the input and input services received. The appellant may claim the ITC for GST charged by M/s. Unique Rehab Pvt. Ltd.

The appellant contended that Section 16(1) provides that every registered person shall be entitled to take credit for input tax charged on any supply of goods or services or both to him that are used or intended to be used in the course or furtherance of his business, and the said amount shall be credited to the electronic credit ledger of such person.

The AAAR while upholding the ruling of the AAR, stated that the exception carved out to provide ITC in the case of tax paid on works contracts is for those who in turn provide works contract service. For example, when a principal gets a contract of work executed by a subcontractor and provides the same to the employer, the principal becomes eligible for ITC even though the contract results in immovable property. However, the appellant society is an organisation that has been formed with the sole objective of managing, maintaining, and administering the society's property as envisaged under the Bye-law and providing services as enumerated under the bye-law.

Appellant's Name: M/s. Mahavir Nagar Shiv Shrushti Co-op. Housing

Date: 30.09.2022

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