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Eligibility to credit of input tax paid on goods/services used for construction which is rented for commercial purposes

Input Tax Credit — Appellants are constructing a shopping mall which they intend to lease/rent out for housing departmental stores, retail shops, food courts, multiplex cinema theater complex and hypermarket. The appellant has procured various goods / services for the installation of Chillers, Air Handling Unit (AHU), Lift, Escalator, Travellator, Water Treatment Plant (WTP), Sewage Treatment Plant (STP), High-speed Diesel yard (HSD) Mechanical Car Park and Indoor/Outdoor Surveillance System (CCTV), DG sets, Transformers, Electrical wiring and fixture, Public Health Engineering (PHE), Fire-fighting and watermanagement pump system in the shopping mall under construction. The appellant has paid tax on the procurement of the goods/services for the installation of the above items. The question is to decide whether input tax credit against purchases of goods and services used for installation of the aforesaid items in the shopping mall under construction can be claimed and utilized to pay GST on the outward supply of services of renting of the shopping mall as retail shops, food courts, cinema theater, etc. Held that—we hold that the appellant is not eligible of the credit of the taxes paid on the procurement of above stated goods and service as held by lower authority.

Tarun Realtors Pvt. Ltd., In Re.... [2020] 21 TAXLOK.COM 097 (AAAR-Karnataka)