Goods and Services Tax – GST – By: – Mr. M. GOVINDARAJAN – Dated:- 17-4-2017 Last Replied Date:- 17-9-2017 – Section 17(5) of the Central Goods and Services Act, 2017 provides that input tax credit in respect of the following shall not be available- (a) motor vehicles and other conveyances except when they are used- (i) for making the following taxable supplies, namely- (A) further supply of such vehicles or conveyances; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supp
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ices or both are used in course of furtherance of business; (e) goods or services or both on which tax has been paid under Section 10 (Composition scheme); (f) goods or services or both received by a non resident taxable person except on goods imported by him; (g) goods or services or both used for personal consumption; (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and (i) any tax paid in accordance with the provisions of Section 74, 129 and 130- Section 74 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of fact; Section 129 deals with the detention, seizure and release of goods and conveyances in transit and the tax paid in this procedure; Section 130 deals with the confiscation of goods or conveyances and levy of penalty. Construction The explanation to Section 17(5) (d) defines the term cons
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Rule 2(l) of CENVAT Credit Rules, 2004 are incorporated in Section 17(5) of the CGST Act, 2017. Rule 2(l) of CENVAT Credit Rules, 2004 defines the term input service . This term excludes certain services that means that such services are not eligible to take and utilize CENVAT credit which are as below- service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (specified services) in so far as they are used for – construction or execution of works contract of a building or a civil structure or a part thereof; laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; or [Section 17(5) (c) of CGST Act provides that the works contract services when supplied for construction of an immovable property, other than plant and machinery is ineligible for taking input tax credit.] services provided by way of renting o
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ices, cosmetic and plastic surgery are declared as ineligible input tax credit vide Section No. 17(5)(b) (i).Howeverwhere an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply.The particular category is to be prescribed by the Government. Membership of a club, health and fitness centre, life insurance services are not eligible in GST regime also vide Section 17(5)(b)(ii); Travel benefits extended to employees on vacation such as Leave or Home Travel Concession, services are also made ineligible for input tax credit vide Section 17(5)(b)(iv); Life insurance, health insurance is also made ineligible for input tax credit.However exceptions are there in this case. The Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in fo
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s and pipes and fittings thereof; (vii) storage tank and (viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis, but including dumpers and tippers used- (1) in the factory of the manufacturer of the final products; or (1A) outside the factory of the manufacturer of the final products for generation of electricity or for pumping of water for captive use within the factory; or (2) for providing output service; (B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for- (i) providing an output service of renting of such motor vehicle; or (ii) transportation of inputs and capital goods used for providing an output service; or (iii) providing an output service of courier agency (C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of- (i) transportat
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i) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or (iii) all goods used for generation of electricity or steam or pumping of water for captive use; or (iv) all goods used for providing any output service; or; (v) all capital goods which have a value up to ten thousand rupees per piece, but excludes- (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol; (B) any goods used for – (a) construction or execution of works contract of a building or a civil structure or a part thereof; or (b) laying of foundation or making of structures for support of capital goods, except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act; (C) capital goods, except when,- (i) used as parts or components in the manufacture of a f
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reduced. Conclusion The definition of the term capital goods , inputs and input services is clear without giving place for interpretation as in the case of CENVAT Credit Rules. The only condition to observe is that the goods or services are used or intended to be used for the furtherance of business. Even though some categories mentioned in Section 17(5) (a), (b), (c) and (d) are not eligible to take input tax credit but if they are used for furtherance of business or some activities. The taking of input tax credit in GST regime is having no complex when comparing the CENVAT Credit Rule regime. – Reply By Sanketh Meri – The Reply = Dear Sir,The major issue under GST on capital goods definition is majorly pertaining to the word 'Capitalization in books' used. Not all capital goods are capitalized in books. This is surely going to cause dilemma. Your views will be appreciated. – Reply By JAIPRAKASH RUIA – The Reply = Section 17 of CGST Act having following cluases :(c) works cont
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e of construction work (service) and material used for repairing ( not capitalized) of plant in the course or furtherance of business is available to the assesse.Sir, you are highly learned person in this regard and hope to receive the guidance.ThanksJaiprakash Ruia – Reply By chintan shah – The Reply = sir i manufacturer chocolates and companies buy it from me for sales promotion as gifting. can the company buying the chocolate take input credit for their purchase of chocolates? – Reply By Pradeep Dadhich – The Reply = Sir,My Client is Constructing a Hotel building, whether we will get input tax credit of material used in constructing the Hotel Building like Cement, HVAC Items, Lift and Others – Reply By abnish rastogi – The Reply = Sir, I want to take your help regarding GST. In Financial year 2016-2017 My VAT ITC was ₹ 1345.00. In Financial year 2017-2018 in 1st Quater, I claimed that ITC (₹ 1345.00). Now the problem is, on 10-july-2017 by mistake i filed Tran-1 with 
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