{"id":16931,"date":"2020-09-26T15:31:55","date_gmt":"2020-09-26T10:01:55","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=16931"},"modified":"2020-09-26T15:31:58","modified_gmt":"2020-09-26T10:01:58","slug":"an-overview-of-blocked-itc-under-gst","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/an-overview-of-blocked-itc-under-gst\/","title":{"rendered":"An Overview of Blocked ITC under GST"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Uninterrupted and smooth chain of ITC is one of the key features of Goods and Services Tax. ITC is a method to avoid cascading effect of taxes. In a simple language it is known as tax on tax. However, section 17(5) of CGST Act, 2017 specifies certain Goods and Services as Blocked credit. Blocked ITC means that a taxable person is not eligible to take ITC on Goods and Services specified as per Section 17 sub clause (5) of CGST Act. This provision has been amended vide GST amendment Act 2018 applicable from 1<sup>st<\/sup> Feb, 2019. Here you will get to know about all the provisions, interpretations, and amendments with respect to Blocked ITC under <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>Goods and services tax<\/strong><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Section 17 (5)\nof CGST Act, 2017<\/h2>\n\n\n\n<p><em><strong>Notwithstanding whatever is contained in section 16(1) and section 18(1), ITC should not be available in the following conditions:-<\/strong><\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Motor vehicles\nand other transportation -17(5)(a) of CGST Act<\/h3>\n\n\n\n<p>ITC is not available with\nrespect to motor vehicle for transportation of persons having seating capacity\nnot more than 13 persons (including driver).<\/p>\n\n\n\n<p>ITC is not available in\nrespect of services such as servicing, repairing, maintenance, leasing, renting\nand insurance of Motor Vehicles, Aircrafts and Vessels.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">CMS Infor Systems Ltd. In\nre&nbsp;(AAAR) 2018<\/h4>\n\n\n\n<p>As\nper the case cited, ITC is not admissible on purchase of vehicle used towards\ntransportation of cash.<\/p>\n\n\n\n<p>As\nper Motor Vehicle Act, ITC is not available on excavators or road rollers.<\/p>\n\n\n\n<p><strong>Exceptions (ITC available)<\/strong><\/p>\n\n\n\n<p><em><strong>When Motor Vehicles, Aircrafts and Vessels are used for further Supply:-<\/strong><\/em><\/p>\n\n\n\n<ul><li>Supply of aircraft and vessels;<\/li><li>Navigation training on vessels;<\/li><li>Training on flying the aircraft;<\/li><li>Transportation of goods.<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/implementation-of-delinking-credit-debit-notes-on-the-gstn-portal\/\">Implementation of Delinking Credit\/Debit Notes on the GSTN Portal<\/a><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Goods and\nServices provided in Relation<\/h3>\n\n\n\n<p><em>ITC is not available as per <\/em><strong><em>Section 17(5) (b) <\/em><\/strong><em>in the following circumstances-<\/em><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"575\" height=\"436\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-106.png\" alt=\"Goods and Services provided in Relation\" class=\"wp-image-16941\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-106.png 575w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-106-300x227.png 300w\" sizes=\"(max-width: 575px) 100vw, 575px\" \/><\/figure><\/div>\n\n\n\n<h4 class=\"wp-block-heading\">&nbsp;Mohana Ghosh In re\n(AAR-WEST BENGAL)<\/h4>\n\n\n\n<p>As\nper the case cited, ITC is not available on&nbsp;purchase of motor vehicles for\nsupplying rent-a-cab service&nbsp;in terms of section 17(5) (a) of CGST Act.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Nipha Exports P Ltd., In re AAR\n(West Bengal)<\/h4>\n\n\n\n<p>As\nper the case cited, the exception only exists in respect of rent-a-cab, life\ninsurance and health insurance services <\/p>\n\n\n\n<p><strong>Exception (ITC available)<\/strong><\/p>\n\n\n\n<ul><li>Inward and\nOutward Supply of goods and services;<\/li><li>Supplies to\nemployees under any law (proviso to section 17(5)(b) of\nCGST Act inserted with effect from 1<sup>st<\/sup> Feb 2019);<\/li><li>Notification by\nthe government, if any.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Works Contract\nServices -Section 17(5) (c) of CGST Act.<\/h3>\n\n\n\n<p>ITC is not available for any\nworks contract services. Input Tax Credit for construction of any immovable\nproperty, except for input of services used for further allocation of Work\ncontracts services.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><em>Jabalpur\nEntertainment Complexes P Ltd. In re&nbsp;<\/em>(2018)\n(AAR-MP)<\/h4>\n\n\n\n<p>As per the case cited, ITC of works contract\nservices received for maintenance and repairs of mall is not available.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Construction of\nImmovable Property for own use- Section 17(5) (d) of CGST Act<\/h3>\n\n\n\n<p>ITC is not available for construction of any immovable property on his own account when used in course of business. This rule does not apply to inputs used to manufactures plants and machinery for own use.<\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong> For purpose of Clause (c) and (d), the expression \u2018construction includes renovation, re-construction, alterations, additions or repairs.<\/div>\n\n\n\n<h4 class=\"wp-block-heading\">Tewari Warehousing&nbsp;Co. (P.)&nbsp;Ltd.,\nIn re 102 -295\/72 GST 485 (AAR&nbsp;&#8211;&nbsp;West Bengal)<\/h4>\n\n\n\n<p>As per the case cited, warehouse construction using\nassembled structure is immovable property and ITC is not available for such\nconstructions.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Maruti\nIspat and Energy P Ltd. In re (AAR-AP).2018<\/strong><\/h4>\n\n\n\n<p>As per the case cited, ITC is not available\nfor&nbsp;<em>Shed to protect plant and machinery<\/em>&nbsp;as shed is a common\nstructure and ITC is not applicable on common structure.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tax paid under\ncomposition scheme- Section 17 (5) (e) of CGST Act<\/h3>\n\n\n\n<p>ITC is not available for Goods and services or both on which tax has been paid under Section 10 of <strong><em>CGST Act<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/CGST\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> i.e., composition scheme.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Goods and\nServices used by taxable non-resident person- Section 17(5) (f) of CGST Act<\/h3>\n\n\n\n<p>ITC cannot be availed on\nnon-resident taxable person, except for goods imported by them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">For personal\nconsumption- Section 17 (5) (g) of CGST Act<\/h3>\n\n\n\n<p>ITC is not available for goods\nand services used for personal or private consumptions of goods. Personal\nConsumptions means consumptions by partners or directors of the company for\nnon-business activities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Goods lost,\ndestroyed, stolen or written off or given for promotion &#8211; Section 17 (5) (h) of\nCGST Act<\/h3>\n\n\n\n<p>ITC is not available for\ngoods lost, destroyed, stolen, written off or disposed by way of gift or free\nsamples orgiven for promotion. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Exide Industries Ltd.\nv.&nbsp;CCGST&nbsp;(2019) <\/h4>\n\n\n\n<p>As\nper the case cited, it was held that if factory is not in possession of the\ngoods then ITC cannot be availed as goods are not received by the factory.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Biostadt India Ltd. In re [2019]\n(AAR-Maharashtra)<\/h4>\n\n\n\n<p>As\nper the case cited, ITC is not available on gold coins distributed among\ncustomers as gift based on sales target.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">CBIC&nbsp;circular No.\n92\/11\/2019-GST dated 7-3-2019<\/h4>\n\n\n\n<p>ITC\non free samples given to related persons is available as it will subject to\nGST&nbsp;while free samples to given any unrelated persons will&nbsp;not\nsubject to GST but ITC have to be reversed.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Polycab Wires (P.) Ltd., In\nre&nbsp;[2019] (AAR \u2013 KERALA)<\/h4>\n\n\n\n<p>As\nper the case cited, ITC is not available for free supply against Corporate Social\nResponsibility.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Sanofi India Ltd., In\nre&nbsp;[2019] (AAR \u2013 Maharashtra)<\/h4>\n\n\n\n<p>As\nper the case cited, ITC is not available on GST paid on expenses incurred\ntowards promotional schemes and goods given as free vouchers as brand reminders.\nThese schemes are performed under any contractual obligations which are\nvoluntarily given on certain situation to the customers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Any tax paid\naccording to the provisions of sections 74, 129 and 130.<\/h3>\n\n\n\n<p>ITC is not available for any\ntax paid due to short payment on account of fraud, suppression,\nmis-declaration, seizure or detention.<\/p>\n\n\n\n<p><strong>Section 74<\/strong><\/p>\n\n\n\n<p>Determination\nof tax not paid or erroneously refunded or ITC wrongly availed or utilized by\nfraud or any mis-declaration or suppression of\nfacts.<\/p>\n\n\n\n<p><strong>Section 129<\/strong><\/p>\n\n\n\n<p>ITC\nis not availed in case of Detention, seizure or release of goods.<\/p>\n\n\n\n<p><strong>Section 130<\/strong><\/p>\n\n\n\n<p>ITC\ncannot be availed when goods are confiscated and penalty is imposed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Recent Changes with respect to Blocked ITC<\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"732\" height=\"455\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-105.png\" alt=\"Recent Changes with respect to Blocked ITC\" class=\"wp-image-16936\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-105.png 732w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-105-300x186.png 300w\" sizes=\"(max-width: 732px) 100vw, 732px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>Section 17(5) of CGST Act, 2017 specifies certain Goods and Services as Blocked ITC. Blocked credit means that a taxable person is not eligible to take ITC on Goods and Services specified as per Section 17 sub clause (5) of CGST Act. Contact <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz<\/strong><\/a> to know more about Blocked ITC under GST.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/inverted-duty-structure-under-gst\/\">Inverted Duty Structure under GST<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Uninterrupted and smooth chain of ITC is one of the key features of Goods and Services Tax. ITC is a method to avoid cascading effect of taxes. In a simple language it is known as tax on tax. However, section 17(5) of CGST Act, 2017 specifies certain Goods and Services as Blocked credit. Blocked ITC [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":16983,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[1040],"acf":{"service_id":"96"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":9718,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16931"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=16931"}],"version-history":[{"count":8,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16931\/revisions"}],"predecessor-version":[{"id":16945,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16931\/revisions\/16945"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/16983"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=16931"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=16931"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=16931"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}