In Advance Ruling No. KER/07/2023 -AAR- AAR (Kerala) rules Kerala State Electricity Board Ltd. eligible for ITC on Deposit Works
Members Dr. S.L. Sreeparvathy & Abraharn Renn S. [03-04-2023]

Read Order: In Re: M/s. Kerala State Electricity Board Ltd.

Chahat Varma

New Delhi, July 19, 2023: The Kerala Authority for Advance Rulings (AAR) has ruled that in cases where the Kerala State Electricity Board Ltd, (KSEBL), collects GST on work deposits from consumers and outsources the work to a third-party contractor, or purchases specific materials separately and uses them in the work, or utilizes materials from a centrally procured stock and outsources only labour, KSEBL can claim input tax credit on GST paid to the contractor, materials, and labour contractor.

The KSEBL (applicant), engaged in the generation, transmission, and distribution of electricity in Kerala, had sought an advance ruling on the eligibility to avail direct input tax credit on deposit works in different scenarios.

The AAR recognized that in all three scenarios presented by the applicant, the outward supply of services by the applicant was subject to GST. As a result, the applicant was eligible to claim input tax credit on the inward supply of inputs, input services, and capital goods used or intended to be used for the purpose of providing the outward supply of services, specifically for deposit works. However, this eligibility was subject to the conditions and restrictions outlined in Sections 16 and 17 of the Central Goods and Services Tax Act, along with Rules 42 and 43 of the Central Goods and Services Tax Rules.