Input tax credit—taxes paid on procurement of goods and services during the Construction period—In the instant case, applicant has sought advance ruling as to whether they are eligible to:
Claim full ITC pertaining to procurement of goods and services for construction of the project during the Construction Period as the entire revenue received during the said period is subject to CST: and
Claim ITCs pertaining to procurement of goods and services during the O & M period after reversal of ITC as per Section 17 (2) of the Central Goods and Services Tax Act 2017 read with Rule 42 of the Central Goods and Services Tax Rule, 2017 as Annuity Payment received during the said period is exempt whereas O & M payments received are subject to CST.

The applicant is of the view that it is eligible to avail full input tax credit of taxes paid on procurement of goods and services during the Construction period.

Held that—The applicant is a supplier of works contract services for construction of an immovable property and goods and services received by them for construction of immovable property are not owned and capitalized by them, hence restriction contained under clause (c) & (d) ibid is not applicable for the applicant - The applicant is paying applicable GST on full value of the project and they are not supplying any exempted goods and services during the construction period of 2 years, therefore they are entitled to claim full ITC paid on all eligible goods and services - Appellant are entitled to claim full ITC during the construction period.

The annuity received by them for the construction of road and bridges is classifiable under SAC 9954 and liable to tax at the applicable rate of GST. The applicant has not specified whether they are supplying any other exempted goods and services during the operation and maintenance period. If they are not supplying any exempted goods and services during the O & M periods the provision of section 17(2) of the CGST Act, 2017 are not applicable upon the applicant - The annuity received by the applicant isa payment of the remaining 50% of cost of the project in biannual equal installments on which the applicant would be paying GST during the construction periods. As the annuity so received by the applicant is taxable, there is no need to take apportioned credit under section 17(2) of the CGST Act, 2017.

Ruling—
The applicant is rendering taxable services during the construction of roads which is liable to tax; hence they are entitled to claim full ITC under the provisions of section 16(1) of the CGST Act. 2017.
The Applicant is entitled to claim ITC on supplies of goods and services or both procured for use in outward supply of O & M service purpose, as they are paying GST on 100 percent of the amount received on account of O & M of the Project.[AUTHORITY FOR ADVANCE RULING, RAJASTHAN] [2018] 5 TAXLOK.COM 54 (AAR-Rajasthan)