ITC on Commercial Property for Leasing: Impact of Withdrawal of AAR Application in Viceroy Properties LLP

Background of the Advance Ruling Application

M/s. Viceroy Properties LLP approached the Authority for Advance Ruling, Maharashtra by filing an application under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 (collectively referred to as “the CGST Act and MGST Act”).

The core issue raised by the assessee related to input tax credit (ITC) on a commercial property purchased for the purpose of earning leasing income. The assessee wanted clarity on the following question:

Whether the Applicant is eligible to avail the Input Tax Credit of the tax paid on purchase of commercial property against the leasing income from the said property.

The application was originally filed in Form GST ARA-01 through an online reference dated 27.09.2022, registered as NO.GST-ARA-62/2022-23/B-32 before the Maharashtra AAR in Mumbai.

Issue Raised Before the AAR

Specific Question on ITC

The assessee sought an advance ruling on one precise question:

  • Whether ITC of GST paid on acquisition of a commercial immovable property can be availed when such property is used for generating leasing income (i.e., renting/letting out the property).

This question is practically significant for assessees who:

  • Purchase commercial buildings or units
  • Pay substantial GST at the time of acquisition
  • Use those properties to earn taxable leasing income

The assessee wanted an authoritative clarification on whether such GST paid on purchase qualifies as eligible input tax credit under the CGST Act and MGST Act.

Subsequent Withdrawal of the Application

Email for Withdrawal

After filing the application and before a ruling on the substantive issue could be pronounced, the assessee reconsidered its position.

As recorded in the order, the assessee, vide email dated 05.01.2026, informed the Authority that:

  • It no longer wished to pursue the clarification originally sought.
  • It desired to voluntarily withdraw the application filed on 27.09.2022.
  • The withdrawal was made without attaching any conditions.

AAR’s Approach to the Withdrawal

The Authority for Advance Ruling examined the assessee’s communication and noted that:

  • The withdrawal request was made voluntarily.
  • The assessee made an unconditional request.

Consequently, the Authority decided to permit the withdrawal of the application.

The request of the applicant to withdraw their application voluntarily and unconditionally is hereby allowed, without going into the merits or detailed facts of the case.

Thus, the Authority chose not to examine:

  • The factual matrix around the purchase and use of the commercial property
  • The legal merits of the ITC eligibility question

Instead, it confined itself to disposing of the application purely on the basis of the withdrawal request.

Operative Part of the Order

Formal Order under Section 98

The Authority passed its order under Section 98 of the CGST Act and MGST Act. The order is styled as: