ITC on Pre-Fabricated Structure Purchased and Not Constructed

[Narayan Pujar]

In one of the cases, the client has purchased an already existing pre-fabricated structure (HSN 9406) on an "as is where is" basis, without undertaking any structural modifications.

As per Section 17(5)(d), input tax credit is restricted in respect of goods or services used for construction of an immovable property. While there are several rulings disallowing ITC on pre-engineered buildings (PEB), such disallowance has typically been on the basis that the PEB was used in the course of constructing an immovable property.

In the present case, can a distinction be drawn on the grounds that there is no construction activity involved, and the transaction pertains to the outright purchase of an already constructed and operational PEB? Accordingly, whether, in the absence of any construction activity, the restriction under Section 17(5)(d) would still apply and whether ITC can be availed in such circumstances?

AI Summary

Input tax credit on pre-fabricated structures depends on whether the asset is movable or immovable under the construction restriction.
Input tax credit on a pre-fabricated structure purchased on an "as is where is" basis turns on whether the recipient used the goods for construction of an immovable property under Section 17(5)(d). If no fresh construction is undertaken and the asset can be shown to be movable or plant and machinery, credit may be available subject to normal conditions. If the structure is treated as immovable property after installation, the credit restriction may still be invoked, making documentation on movability and fixation critical.