ITC on CCTV camera

[Ashish Diwedi]

We are a residential society registered under GST for supplying services to our members. Since monthly contribution is ore than 7500 per month we have been paying GST . Recently, we have installed Park Plus Parking system in our society which helps or facilitates the members to park their cars. Also we have installed CCTV camera in our society premises.
Can we take ITC or parking system & CCTV camera and use against payment of GST on monthly contribution from members.

[Ganeshan Kalyani]

Yes, the society is eligible to take credit on CCTV camera.

[Shilpi Jain]

In this regard, is the society paying GST on entire amount of contribution collected from the members or only on the amount in excess of Rs. 7500?

If it is the latter then the credit has to be restricted as per rule 43 to the extent of the exemption taken every month over a period of 60 months.

[Shilpi Jain]

The reversal of credit would be rule 43 as mentioned in the reply above, in case the equipment is capitalised in the books of accounts.

If not capitalised then the reversal of credit would be as per rule 42 of the CGST Rules. In case of rule 42 reversal, the reversal would have to be done in proportion of the exempt revenue in the year of purchase.

[Ashish Diwedi]

As per Circular No.109/28/2019- GST dated 22nd July, 2019, it has been clarified that In case the charges exceed Rs. 7500/- per month per member, the entire amount is taxable. Hence, the question of paying GST on the differential amount i.e amount in excess Rs. 7500 does not arise. The issue is there are few AAR which restricts ITC in respect of CCTV camera or Parking system being Works contract services. So my question is will ITC be available or will it be restricted being Works Contract Services.

[Amit Agrawal]

If concerned inward supplies are not the construction of an immovable property, but that of plant and machinery as per explanation given under Clause (6) of Section 17 (5) of the CGST Act, 2017, ITC against such inward supplies is available to the society in my view.

Based on broad understanding of these systems (& subject to checking of factual aspects & on ground situation in your specific case), they are not 'immovable property' in my view.

However, if suppler has charged GST on such contract by treating it as 'works contract', Dept. will treat them as 'immovable property' so to deny ITC.

Hence, it is advisable to ensure that vendor charges for goods and labor either separately or combined but for principal supply involved assuming that these are naturally bundled supplies. But, vendor should not treat them as 'works contract service' under GST.

In any case, kindly ensure that vendor does not use HSN suggesting 'construction of immovable property' for such supplies.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

W.r.t. Post No. 2 & 3 above by Ms. Shilpi Jain Mam, with due respect, I am unable to agree with.

In my humble view, rule 42 & 43 does not apply to the situation when society is treating contribution of Rs. 7500/- per month per member as exempted and balance contribution (amount exceeding Rs. 7500/- per month) from all its members as taxable.

As per query raised, monthly contribution exceeds Rs. 7,500/- per month for its members.

In such a situation, there is no 'exempt supply' - as defined u/s 2 (47) of the CGST Act, 2017 - involved. Consequently, Section 17 (2), rule 42 & 43 are out of picture.

P.S. For above views, controversies regarding correctness of society's course of GST payment and its interpretation of Serial No. 77 (c) of Notification No. 12/2017- Central Tax (Rate) (as amended from time to time) are ignored. In other words, above views of mine stands even with assumption that society is correct in paying GST only on portion of contribution (i.e. amount exceeding Rs. 7,500/- per month) received from its members.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Agree with the views of Amitji that in this case it will not be an exempt supply since exempt supply is defined to include only WHOLLY exempt supplies. In this case even assuming it is partly exempt, section 17(2) will not attract.

Ensure an intimation is made to department regarding this transaction.

[Shilpi Jain]

Also not that any circular which is not in line with the statute is as good as non-existant.

[Shilpi Jain]

To me CCTV camera does not seem to be an immovable property as it can be removed without much damage.

Even if vendor bills as WCS, since it is an equipment no restriction of credit should apply i.e. credit should be eligible.

[Amit Agrawal]

Under excise regime, there was a Supreme Court judgment to the effect (broadly speaking) that classification cannot be changed at recipient's end.

So, my suggestions - given in post No. 5 above - should be seen in context of avoiding needless disputes / litigation & potential risks there-against to the extent possible.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Just to clarify my post at Serial No. 6 above, my views are based on factual understanding of subject-query that every member's monthly contribution to the society exceeds Rs. 7,500/-.

In other words, for my given views, it is presumption that there is not a single member of the society whose monthly contribution is Rs. 7,500/- or less.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Ravinesh Sinha]

ITC shall be available as the work contract services provided in respect of CCT is not for construction of immovable property rather it is for security of resident .

Definition of WCS for blocked credit is as under

works contract services when supplied for construction of an immovable property [other than plant and machinery] except where it is an input service for further supply of works contract service

expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

[Amit Agrawal]

W.r.t. my post at serial No. 5 & 10 above, one may refer to Apex Court Ruling in case of SARVESH REFRACTORIES (P) LTD. VERSUS COMMISSIONER OF C. EX. & CUSTOMS, as reported in 2007 (11) TMI 23 - SUPREME COURT.

AI Summary

Input tax credit availability for CCTV and parking systems turns on classification as plant and machinery versus works contract. Eligibility for ITC on CCTV and parking systems depends on whether inward supplies are treated as works contract services for construction of immovable property or as supplies of goods/plant and machinery. If members' contributions are wholly taxable, Section 17(2) and reversals under Rule 42 and Rule 43 generally do not apply and credit is available; if supplies are capitalised, Rule 43 may trigger reversal, whereas non-capitalised items may require Rule 42 proportional reversal. Proper vendor classification and invoicing are advised to avoid denial of credit.