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The tax paid on the Upfront Lease Premium is available as Input Tax Credit to the applicant subject to provisions of Section 16 and 17 of the CGST Act 2017.

Input tax credit— Section 16, 17 of CGST Act— In the instant case, the applicant has sought Advance Ruling on the following questions:

Whether input tax credit can be claimed on upfront lease premium paid? If the answer is affirmative, in what manner the input tax credit can be availed?

The applicant has stated that the Chennai Port Trust has allotted covered space to an extent of 267 sq.m at Ground floor - North wing of Jawahar building on Upfront Premium for Long Term Lease Basis to the applicant till 31.08.2045 from the date of handing over of the premises by Chennai Port Trust.

The space is intended to be used by the applicant as an extended corporate office. The prevailing rate as per Schedule of Rates for the above building premises at Rajaji Salai is Rs. 740/ -(for January 2021) per Sq.m per month or part thereof which is arrived after effecting the compoundable annual escalation of 5% on every year basis.

In the instant case the contract is a lease contract of the built-building for use as an extended corporate office for accommodation of record & as documentation room and it is for the business purpose of the applicant. The lease allotment letter do not spell of lease for any construction activity on the closed space leased for business purposes. Hence, the upfront premium made is the lease rentals as per the allotment order/letter of Chennai Port Trusts and it is nothing but lease rentals paid for the services of 'Renting of Immovable property' for business purpose.

From the material on record, we observe that the upfront premium paid is not related to any construction activity of such covered space but against the rental value for the period of rent calculated for the period of lease and collected upfront. Thus, provisions of Section 17(5) (d) is not applicable to the instant case.

The provisions of Section 17(5)(d) is not attracted to the activity of 'renting Immovable Property Services'. Therefore, the credit of tax paid on the upfront lease rent by the applicant is available subject to fulfillment of other conditions set out under Section 16 of the Act.

Held that— The tax paid on the Upfront Lease Premium is available as Input Tax Credit to the applicant subject to provisions of Section 16 and 17 of the CGST/TNGST Act 2017.

The question on the manner in which Input Tax Credit can be availed, being procedural not admitted/answered.

The tax paid on the Upfront Lease Premium is available as Input Tax Credit to the applicant subject to provisions of Section 16 and 17 of the CGST Act 2017.

Input tax credit— Section 16, 17 of CGST Act— In the instant case, the applicant has sought Advance Ruling on the following questions:

Whether input tax credit can be claimed on upfront lease premium paid? If the answer is affirmative, in what manner the input tax credit can be availed?

Held that— The tax paid on the Upfront Lease Premium is available as Input Tax Credit to the applicant subject to provisions of Section 16 and 17 of the CGST/TNGST Act 2017.

The question on the manner in which Input Tax Credit can be availed, being procedural not admitted/answered.