2024 (6) TMI 12 - AAR - GST

Rotary car parking system classified as immovable property under Section 17(5)(d), Input Tax Credit denied for permanent installation.

In Re: M/s. Arthanarisamy Senthil Maharaj (M/s. A. Senthil Maharaj)

The Tamil Nadu AAR held that a rotary car parking system is immovable property, not plant and machinery, making Input Tax Credit inadmissible under ... Input Tax Credit - Rotary parking system falling under HSN Code 8428 or not - Rotary car parking is movable or immovable? - Rotary Car parking falls under the category of plants and machine or not. ITC on Rotary parking system - HELD THAT:- It is seen from the invoices furnished by the applicant that the car parking system is not supplied as such as a whole. But, what is supplied is constituent parts of the Car parking system viz Gauge Plate, Bolts, hex nuts, Frame Assembly and pallet with electricals. As observed from the submissions made by the applicant the vendor shall design the car parking structure based on the specific requirement of the applicant on receipt of the purchase orders from the applicant - it is found that a specific foundation is created and steel structure which is a basic frame work of the parking system, is erected on such foundation. This specific foundation and structure is a pre-requisite for successful installation and effective working of the car parking system. Whether Rotary car parking is movable or immovable? - HELD THAT:- The rotary car parking has been decided to be built in the own land of the applicant, with a view to retain the existing tenants as well as to have full occupancy state. Further, it is not the case of the applicant to plan it to dismantle and move the structure to some other place. Hence, the intention of the applicant is to enjoy the benefit of the civil foundation as well as the car parking fastened to the foundation permanently, until the system ceases to exist or function. The car parking system falls within the meaning of Section 3 (26), as envisaged under General Clauses Act, 1897 i.e. 'permanently fastened to anything attached to the earth' and as envisaged under Clause (c) of the Section 3 of the Transfer of property Act 1882 which reads 'attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached.' and thus Rotary Car Parking system is not a movable property as contested by the applicant. Whether the Rotary Car parking falls under the category of plants and machine? - HELD THAT:- As per the explanation to the Section 17 (5) (c) and Section 17 (5) (d), of the Act, the term 'construction' includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. Hence, it is our view that, 'Rotary Car Parking System' falls under the ambit of additions as envisaged in the said explanation clause, to the immovable property i.e. in this case existing commercial building owned by the applicant and becomes a part of the existing building - the impugned supply i.e., the installation and commissioning of the 'Rotary Car Parking System', received by the applicant falls under the ambit of Section 17 (5) (d) of the Act, that is goods or services or both received by a taxable person for construction of immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business and hence ITC is not admissible as per section 17 (5) (d) of the CGST Act, 2017. Thus, Input tax Credit is not admissible under section 17 (5) (d) of CGST/TNGST Acts 2017 on the Rotary Parking System desired to be installed by the applicant. Issues Involved:1. Admissibility of Input Tax Credit (ITC) on the 'Rotary Parking System' under HSN Code: 8428.Summary:1. Admissibility of ITC on the 'Rotary Parking System' under HSN Code: 8428:The applicant, engaged in the service of Renting of Immovable Property, sought an advance ruling on the admissibility of ITC on the 'Rotary Parking System' classified under HSN Code: 8428. The applicant argued that the parking system is movable and intended for the furtherance of business, thus fulfilling the conditions of Section 16 of the CGST Act, 2017. They contended that the parking system is not an immovable property and should not fall under the blocked credits as per Section 17 (5) (c) and 17 (5) (d) of the CGST Act, 2017, as it is classified as 'plant and machinery'.However, the State and Central authorities refuted this claim, stating that the parking system requires a civil foundation and becomes a permanent fixture, thus classifying it as immovable property. The authorities argued that the system cannot be moved without dismantling, which aligns with the definition of immovable property under Section 3 (26) of the General Clauses Act, 1897, and Section 3 of the Transfer of Property Act, 1882. They further emphasized that the installation of the parking system involves construction activities, which are classified as works contract services related to immovable property.The Authority for Advance Ruling (AAR) examined the submissions and found that the parking system, once installed, becomes an integral part of the immovable property, as it requires a specific foundation and structural support. The AAR referred to judicial precedents and relevant sections of the General Clauses Act and Transfer of Property Act, concluding that the parking system is indeed immovable property. Consequently, it falls under the exclusion clause of 'any other civil structures' and does not qualify as 'plant and machinery'.Based on these findings, the AAR ruled that the Rotary Parking System is an immovable property and falls under the ambit of Section 17 (5) (d) of the CGST Act, 2017. Therefore, ITC is not admissible on the Rotary Parking System desired to be installed by the applicant.