Immovable property classification blocks GST input tax credit on construction materials used for a fixed hall or shamiana

A structure such as a hall, pandal or shamiana erected with iron and steel pillars, nuts and bolts and a foundation was treated as immovable property for GST purposes because the annexation, civil foundation and intended beneficial enjoyment indicated permanence rather than a detachable installation. Once classified as immovable property, the iron and steel materials used for its construction attracted the credit restriction in section 17(5)(d), which blocks input tax credit on goods used for construction of immovable property on own account other than plant or machinery. The related input tax credit was therefore held inadmissible.

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Issues: (i) Whether a temporary structure such as a hall, pandal or shamiana erected with iron and steel pillars, nuts and bolts and a foundation is movable or immovable property under GST law; (ii) Whether input tax credit on iron and steel pillars and bolts used for creating such structure is admissible under section 16, or barred under section 17(5)(d), of the GST law.

Issue (i): Whether a temporary structure such as a hall, pandal or shamiana erected with iron and steel pillars, nuts and bolts and a foundation is movable or immovable property under GST law.

Analysis: The governing approach was taken from the statutory concept of goods and the allied meaning of immovable property under the General Clauses Act and the Transfer of Property Act. The decisive factors applied were the nature of annexation, the intention behind fixation, and whether the structure is permanently fastened to the earth or only fixed for stability and vibration-free use. The ruling distinguished mere fixation for operational convenience from permanent assimilation with the earth. On the facts, the structure was treated as erected for permanent beneficial enjoyment at the premises, with substantial civil foundation and annexation indicating permanence rather than a detachable temporary installation.

Conclusion: The structure was held to be immovable property.

Issue (ii): Whether input tax credit on iron and steel pillars and bolts used for creating such structure is admissible under section 16, or barred under section 17(5)(d), of the GST law.

Analysis: Input tax credit under section 16 was considered against the blockage provision in section 17(5)(d), which denies credit for goods or services used for construction of an immovable property on own account, other than plant or machinery. Once the structure was found to be immovable property, the materials used for its construction fell within the credit restriction. The classification of the structure therefore directly attracted the statutory bar on credit.

Conclusion: The input tax credit was held to be inadmissible and blocked by section 17(5)(d).

Final Conclusion: The ruling affirms that the structure falls within immovable property for GST purposes and that the related construction inputs do not qualify for credit.

Ratio Decidendi: For GST purposes, a structure fixed to the earth is immovable when the annexation is intended to be permanent or for permanent beneficial enjoyment, and input tax credit is unavailable on goods used for construction of such immovable property under the statutory blockage provision.

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