2020 (7) TMI 511 - AAR - GST

Paver Blocks Not Immovable Property: Applicant Denied Input Tax Credit

In Re: M/s. Sundharams Private Ltd.

The authority concluded that the paver blocks are immovable property, and the applicant is not entitled to avail Input Tax Credit (ITC) under Section ... Input Tax Credit - Paver Blocks laid on the land - immovable or movable property? - such blocks are not to be fastened on earth, rather they are only laid on plain surface to park the cars of Company’s customers - HELD THAT:- In the subject case, the Paver Blocks have to be dismantled and disassembled from the vacant land before being erected or assembled elsewhere - It cannot be disputed that such Paver Blocks are not usually shifted from one place to another, nor is it practicable to shift them frequently. The Paver Blocks, once they arc erected and assembled, continue to operate from where they are positioned and actually become a part of the parking facility. Having regard to the manner in which these parking facilities are erected using Paver Blocks, they do not answer the description of “goods”. The main reason for use of paver blocks is to keep the tyres of the vehicles in good condition with no wear and tear, to have longevity, durability and flexibility to re-use. The flexibility to re-use does not mean that blocks will be removed and re-erected frequently. They are meant to be permanently fixed to earth but whenever the need arises the applicant may remove them and re-erect - the applicant would not use the paver blocks as in the subject case with an intention to remove it and use the same as a movable property. The subject goods would qualify as immovable property and therefore Applicant cannot avail ITC in the subject case as per Section 17(5) (d) of the CG ST Act, 2017 - answered in negative. Issues Involved:1. Whether the applicant is entitled to avail Input Tax Credit (ITC) under CGST/SGST Act for taxes paid on the purchase of Paver Blocks laid on the land.Detailed Analysis:1. Facts and Contentions by the Applicant:- The applicant, engaged in warehousing and support services, uses paver blocks in their parking area for efficient and safe parking.- These paver blocks are not permanently embedded and can be removed and reused elsewhere.- The applicant argues that the blocks should be considered movable items and thus eligible for ITC.- They assert that the expenditure on paver blocks is not capitalized as part of immovable property in their books, hence ITC should not be disallowed under Section 17(5)(d) of the CGST Act.- The applicant contends that the laying of paver blocks does not constitute construction of immovable property and should not be considered a works contract service.- They further argue that even if the paver blocks are considered immovable property, ITC should still be allowed based on the Orissa High Court’s decision in Safari Retreats Pvt Ltd. vs. Chief Commissioner of CGST.2. Contentions by the Jurisdictional Officer:- The officer argues that the laying of paver blocks amounts to construction of immovable property as they are fastened to the earth using interlocking blocks and firm support.- The officer cites the Supreme Court case 'Municipal Corporation of Greater Bombay vs. Indian Oil Corporation Ltd.' to support the argument that paver blocks are permanently embedded and hence constitute immovable property.- The officer concludes that ITC is not allowable under Section 17(5) of the CGST Act.3. Hearing and Discussions:- Both parties presented their arguments, and the authority examined the facts, documents, and submissions.- The main issue was whether the paver blocks should be treated as movable or immovable property.4. Findings:- The authority noted that the paver blocks, once laid, are not easily movable and require dismantling and reassembly, thus constituting immovable property.- The authority referred to various court decisions, including the Supreme Court case 'T.T.G. Industries Ltd. vs. CCE' and the Bombay High Court case 'Bharti Airtel Ltd. vs. Commissioner of Central Excise', to support the conclusion that the paver blocks are immovable property.- The authority found that the paver blocks are permanently fixed to the earth and cannot be considered movable goods.- The authority ruled that the applicant cannot avail ITC as the paver blocks are used for constructing immovable property, which is barred under Section 17(5)(d) of the CGST Act.- The authority also noted that the Orissa High Court decision in Safari Retreats Pvt Ltd. is pending appeal in the Supreme Court and has not attained finality, thus not relying on it.Conclusion:- The authority concluded that the paver blocks are immovable property, and the applicant is not entitled to avail ITC under Section 17(5)(d) of the CGST Act.- The final order answered the question in the negative, denying the applicant's claim for ITC.