Appeal Dismissed: ITC not allowed on lift purchases under CGST Act

The appellate authority upheld the decision of the Authority for Advance Ruling, concluding that Input Tax Credit (ITC) is not admissible on the purchase of lifts as per Section 17(5)(d) of the CGST Act, 2017. The appeal was dismissed, affirming that lifts, when installed in a building, are classified as immovable property, and thus, ITC on their purchase is blocked.

---

---

Issues Involved:
1. Eligibility of Input Tax Credit (ITC) on the purchase of lifts for a hotel under the CGST Act, 2017.
2. Interpretation of Section 17(5)(d) of the CGST Act, 2017.
3. Classification of lifts as either 'plant and machinery' or 'immovable property.'

Issue-wise Detailed Analysis:

1. Eligibility of Input Tax Credit (ITC) on the Purchase of Lifts:
The appellant, a hotel under construction, sought ITC on lifts installed in the hotel, arguing that lifts are used in the course or furtherance of business. The Authority for Advance Ruling (AAR) denied ITC, stating that lifts are part of the building, thus blocked under Section 17(5)(d) of the CGST Act, 2017. The appellant contended that lifts should be classified as 'plant and machinery,' not immovable property, and thus should be eligible for ITC.

2. Interpretation of Section 17(5)(d) of the CGST Act, 2017:
Section 17(5)(d) disallows ITC on goods or services used for the construction of immovable property (other than plant and machinery). The appellant argued that the lift, being a machine, should not be classified as immovable property. They cited Explanation 2 of Section 17(5), which defines 'plant and machinery' and excludes buildings and civil structures. The appellant claimed that the AAR misinterpreted this explanation by concluding that lifts, when installed in buildings, become part of the building.

3. Classification of Lifts as 'Plant and Machinery' or 'Immovable Property':
The appellant argued that lifts should be considered 'plant and machinery' because they are apparatus fixed to earth by foundation or structural support, used for making outward supply of services. They cited several judicial precedents where machinery fixed to earth by nuts and bolts was not considered immovable property. The appellant emphasized that lifts could be installed and uninstalled without damaging the building, thus retaining their movable character.

Discussion and Findings:
The appellate authority reviewed the submissions and found that Section 17(5) of the CGST Act clearly blocks ITC on goods or services used for constructing immovable property, including lifts. The authority noted that the definition of immovable property includes things attached to the earth or permanently fastened to anything attached to the earth. Despite the appellant's arguments and judicial precedents from the pre-GST era, the authority concluded that lifts, when installed in buildings, become part of the immovable property.

The authority also noted that the appellant did not provide any new arguments or evidence that would warrant a different interpretation from the AAR's decision. The judicial citations provided by the appellant were considered but found not applicable in the GST context due to the clear provisions of Section 17(5) of the CGST Act.

Conclusion:
The appellate authority upheld the AAR's decision, concluding that ITC is not admissible on the purchase of lifts as per Section 17(5)(d) of the CGST Act, 2017. The appeal was dismissed, affirming that lifts, when installed in a building, are classified as immovable property, and thus, ITC on their purchase is blocked.

---