๐ What is Infopark Kochi?
Infopark Kochi is a major IT hub located in Kerala, India. It houses hundreds of IT/ITES companies providing software services and exports.
The park is developed and operated by the Government of Kerala, offering office spaces on lease to private companies.
✅ Background of the Case
The core issue was about whether Infopark Kochi can claim Input Tax Credit (ITC) for GST paid on:
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Construction services for building the park,
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Development of infrastructure,
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Other inward supplies used for leasing out office spaces.
Infopark leases fully developed office spaces to various IT companies and collects GST on rent.
So the question was:
Can Infopark claim ITC on the construction and development cost, since the final output is taxable lease rent?
๐ Why is this Important?
Under Section 17(5)(d) of the CGST Act, ITC is blocked for works contract services when used for construction of an immovable property (except when used for plant & machinery).
But there’s an exception — if the immovable property is further supplied as a taxable output service, then ITC may be allowed.
So the whole issue was:
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Is leasing out office spaces an ‘exempt supply’ or ‘taxable supply’?
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Does the restriction under Section 17(5) apply to Infopark?
✅ Ruling by AAR Kerala
Infopark approached the Authority for Advance Ruling (AAR) Kerala for clarity.
AAR held:
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The lease/rent of commercial property is a taxable supply under GST.
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Since Infopark charges GST on rent, the output supply is taxable.
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Hence, ITC on works contract services used for construction is NOT blocked under Section 17(5)(d) because the property is further supplied as a taxable output service.
Therefore, Infopark is eligible to claim ITC.
๐ Key Points of the Ruling
✔️ Renting of commercial immovable property is a supply of service under GST.
✔️ Such renting attracts GST @ 18%.
✔️ ITC on works contract services is allowed if the constructed property is used for further taxable renting.
✔️ The bar under Section 17(5)(d) does not apply if there is further taxable supply.
✅ Impact of the Infopark Kochi Case
This ruling clarified an important point for:
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Builders and developers of commercial complexes.
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SEZ developers, IT parks, Business parks, and co-working spaces.
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Any business renting out constructed premises and charging GST.
The ruling supports the view that ITC is available if the immovable property is used for further taxable leasing/renting.
๐ Important Note
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The AAR ruling is binding only for the applicant (Infopark) and its jurisdiction.
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However, it sets a strong persuasive precedent for similar businesses across India.
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Businesses should ensure proper documentation and GST invoicing for rent collection.
✅ Practical Takeaway
✔️ If you are renting out a commercial property and charging GST, you can claim ITC on construction, repair, and maintenance costs.
✔️ Always maintain proper agreements, invoices, and output tax payment proofs.
✔️ This helps reduce the tax cost and prevents ITC disputes.
๐ข Legal Tax Guru’s Final Word
The Infopark Kochi GST ruling is a good example of how the law works in practice — works contract ITC is not always blocked, if you are supplying taxable renting services.
If you run a business park, mall, or office space leasing business — check your contracts and claim eligible ITC.
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