AAR West Bengal has rejected an application seeking clarity on the admissibility of ITC for GST paid on works contract and construction services and ruled that it was legally debarred from entertaining the application because the exact issue was already under active investigation.
Saloni Kumari | May 27, 2026 |
Advance Ruling Application Dismissed as ITC Dispute was Already Pending Before Enforcement Authorities
The Present Authority for Advance Ruling (AAR) West Bengal has been sought by Sky Height Enclave Private Limited seeking an advance ruling to confirm whether ITC could be claimed under Section 16 of the Central Goods and Services Tax (CGST) Act, 2017.
The applicant is a private entity engaged in constructing an integrated commercial hotel building in Kolkata. Upon the completion of the project, the applicant intended to provide taxable outward supplies including hotel accommodation, restaurant services, and banquet facilities.
The applicant has filed an application under sub section (1) of section 97 of the GST Act to the AAR West Bengal seeking clarification on the questions:
“Question 1. Whether Input Tax Credit under Section 16 of the CGST Act, 2017 is admissible on GST paid on works contract services and other inward supplies used for construction of a hotel building, where such building is functionally indispensable and constitutes the very apparatus for providing taxable hotel accommodation services, restaurant services and banquet services, and where such construction is not undertaken “on its own account” but exclusively for providing taxable outward supplies covered under Schedule II of the CGST Act, 2017?
Question 2. Whether Input Tax Credit is admissible on GST paid on construction and fit-out of areas within the hotel building used for operating a restaurant and banquet facilities, where outward supplies from such areas are taxable under GST?
Question 3. If Input Tax Credit is admissible, whether such credit is required to be apportioned under Section 17(1) of the CGST Act, 2017 between various taxable outward supplies provided by the Applicant?”
Ruling given by AAR West Bengal:
The Authority for Advance Ruling (AAR) West Bengal has refused to pass a ruling on the merits of the ITC eligibility and rejected the application altogether.
The AAR West Bengal observed that the questions raised in the advance ruling application were already pending before the jurisdictional SGST enforcement authorities. Referring to the proviso to Section 98(2) of the CGST Act, the Authority held that as per the proviso, an advance ruling application cannot be admitted where the same issue is already raised, pending or decided in proceedings under the Act. The application was thus dismissed as non-maintainable.
Read the official advance ruling for complete information
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