Input Tax Credit denied for pre-fabricated sheds under section 17(5)(d) as they constitute immovable property despite technology used

AAR Telangana ruled that Input Tax Credit is not allowable for construction of pre-fabricated sheds (PFS) under section 17(5)(d) of CGST/TGST Act. The Authority held that despite using pre-fabricated technology, PFS constitutes immovable property as it is permanently attached to RCC platform and cannot be relocated without substantial damage. The movable components lose separate identity once assembled into the structure. Credit denial applies to both pre-fabricated components and works contract services used in PFS construction.

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Issues Involved:
1. Whether Input Tax Credit (ITC) is allowed for the construction of a shed using pre-fabricated technology.

Summary:

Issue 1: Whether Input Tax Credit is allowed for construction of shed using pre-fabricated technologyRs.

Applicant's Submissions:
- The applicant, M/s. Sanghi Enterprises, constructs sheds on leased land using pre-fabricated technology.
- The shed is fixed by anchor bolts to a low RCC platform embedded in the ground, with other components like columns, beams, rafters, wall sheets, and roof shed joined by nuts and bolts.
- The shed can be easily dismantled and restructured at another location, reducing capital expenses.
- The applicant argues that since the shed can be dismantled without damage, it should not be considered immovable property and relies on the Supreme Court judgments in Solid & Correct Engineering Works and Sirpur Paper Mills Ltd.

Authority's Findings:
- Under Section 17(5) of the CGST Act, goods or services received for the construction of immovable property are not eligible for ITC.
- The applicant's shed, constructed using prefabricated structures, is considered immovable property as it is erected for the beneficial enjoyment of the land.
- The Supreme Court's ruling in Sirpur Paper Mills Ltd. is not applicable as it pertains to machinery, not structures like sheds.
- The Supreme Court in Solid & Correct Engineering Works held that even temporary structures, if intended for the beneficial enjoyment of the land, are immovable property.
- The shed constructed by the applicant is therefore classified as immovable property and ITC is not admissible under Section 17(5)(d) of the CGST Act.

Ruling:
- Input Tax Credit is not allowed for the construction of the shed using prefabricated technology as the shed is considered immovable property.

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