2026-VIL-128-AAR
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SGST Advance Ruling Authority

GST – Uttarakhand AAR - Input Tax Credit on upfront lease amount - Admissibility of ITC on GST paid on upfront lease amount for construction of factory on leased land - Meaning of term "plant and machinery" under Section 17(5)(d) of CGST Act - Applicant sought ITC of GST charged on upfront payment of lease amount for long term lease of industrial plot from lessor where applicant intended to construct factory building on such leased land. Department argued that ITC was blocked under Section 17(5)(d) as land and building are specifically excluded from "plant and machinery" - Whether ITC is admissible on GST paid on upfront lease amount for construction of immovable property other than plant and machinery - HELD - Input tax credit shall not be available in respect of goods or services received for construction of immovable property other than plant and machinery on own account when used in course or furtherance of business. As per Explanation in Section 17(6), the expression "plant and machinery" under the Act specifically excludes land, building and any other civil structures. Judicial pronouncements in similar cases before Advance Ruling Authorities in other States have consistently held that ITC of GST paid on lease rental for land is blocked under Section 17(5)(d) as legislative intent is to block ITC in respect of services pertaining to land received by taxable person for construction of immovable property - In present case applicant intends to construct factory building on leased land which is an immovable property other than ‘plant and machinery’ and therefore ITC is blocked. Applicant is not eligible for claim of ITC of GST paid on upfront payment of lease amount – Ordered accordingly - Jurisdiction of Authority for Advance Ruling - Application seeking Ruling on admissibility of refund of GST - Applicant sought ruling from Authority for Advance Ruling regarding whether it could claim refund of GST paid on upfront lease amount for industrial plot - Whether Authority for Advance Ruling has jurisdiction to pronounce ruling on admissibility of refund under Section 97(2) of CGST Act, 2017 - HELD - Admissibility of refund is governed by Section 54 of the CGST Act and is not covered under any clause of Section 97(2) of the Act. Section 97(2) permits Authority to pronounce ruling only on seven specified matters namely classification of goods or services, applicability of notifications, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, requirement of registration, and whether any act results in supply of goods or services. Seeking ruling on admissibility of refund of tax paid by applicant is not within purview of Section 97(2) of the Act and Authority has no jurisdiction to pronounce ruling thereon. Application relating to admissibility of refund is rejected.
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