Firms drag Centre, state to Rajasthan HC

The Rajasthan High Court (HC) has agreed to hear companies, which have challenged a provision that denies input tax credit (ITC) under goods and services tax (GST) for taking land on long-term lease for commercial building.

Section 17(5)(c) and Section 17(5)(d) of the Central Goods and Services Tax Act, 2017, have been challenged. The two Section deal with blocked credits for works contract services when supplied for the construction of an immovable property and goods or services or both received by a taxable person for construction of an immovable property, respectively, have been challenged.

The high court has issued notices to the central and state governments and will now hear the case on September 24.

The petitioner company, Kamal Cogent Energy Private Limited, has also challenged the levy of 9 per cent Central GST (CGST) and Rajasthan GST (RGST) for the land that it took on a 99-year lease from the

Rajasthan Industrial Development and Investment Corporation (RIICO).

In its petition to the high court, a copy of which Business Standard has seen, the company has said that since it intends to make a commercial complex or a hotel on the land that it had leased from the RIICO, which would come as taxable supply

unde the provisions of CGST, it would automatically qualify as input service. The company thus should be able to claim ITC, the petition says.

“The tax paid on such a service should be available to the petitioner as input tax credit. However, after the enactment of CGST, certain restrictions have been provided in the Act,” the company said in its petition.

Similar pleas have been filed by companies across several high courts of the country.

The Odisha high court in a judgment in May this year had ruled in favour of the petitioners who had sought ITC on longterm land lease deals.