TaxTMI 
TaxTMI 
2019 (10) TMI 876
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....Pumping systems and tanks, Lighting system, Physical security system and Fire System" 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that they are engaged in building and managing industrial warehousing spaces for consumers and industrial centers. The Applicant is proposing to construct a new Industrial warehouse at Baguru Village in Karnataka. b. The Applicant procures various goods and services from various Contractors for fitting-out of the warehousing spaces and provides the subject space having with all facilities and infrastructure facility on rent to various industrial consumers and manufacturers. The Applicant discharges applicable GST on such procurements. c. Section 16(1) of Central Goods and Services Tax Act, 2017 ("CGST Act") entitles a registered person to take credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business. d. The -applicant States that however, as per Section 17(5) of the CGST Act, a restriction is imposed with respect to input tax Credit (hereinafter referred to as "ITC") on proc....
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....stem requires grounding wire without which it cannot function. Advantages of installing a receptacle system in a business organization are as follows: • • They are important to detect ground faults; and • These are designed to provide protection from electric shock hazards and injuries that can be caused from power surges, outages and storms and promote safe working environment; B. Pumps, pumping systems and Tanks: Pumps And pumping-systems are devices that help move fluids by mechanical action. Tanks help store these liquids, typically water. • Pumps - These are devices that expends energy in order to raise, transport or compress fluids. Pumps are required pumping liquids and gases used for various purposes for daily functioning of warehouse. Water and other fluids are required in a business organization for domestic purposes and also to maintain constant pressure. In general, a pump is mounted on a strong base plate supported by a strong concrete foundation. In addition, to the pumping machine itself, the scope of work provided to the contractors also includes construction and fabrication of the room that en....
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.... are known to roam around the area. They can prevent wild animals from gaining access to the property. Following are other reasons gates and fences are required for an organization: • • provides protection from theft that can cause to serious threat to business properties; • Provides security during disruptions such as mob attacks, vandalism or other invasions; and • Promotes peaceful working environment. • Gear operated rolling shutter -This is type of door or window shutter consisting of many horizontal slats hinged together which is operated by gear. They are an excellent way to protect the premises from unwanted entry. It is difficult to remove /bypass roller shutters because they are very closely fitted to the window and cannot be pulled away or broken through without a great deal of effort and noise. Roller shutters are required in areas that are exposed to inclement weather, protect windows from hail damage and can be made to withstand high wind. [n case of damaging Weather the Shutters Will easily deflect branches and other debris that can break glass and cause damage to premises. Roller Shut....
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....ry about a gap between the warehouse and the vehicle. By removing this gap, we save time on unloading, and ensure that there is no damage to goods due to an unsafe loading/ unloading environment. They can handle capacities of thousands of pounds and also have Sides that prevent run off. E. Fire system: This includes a number of equipment working together to detect and warn people through visual and audio appliances when smoke, fire, carbon monoxide or other emergencies are present and prevent disasters from taking place within an organization. The organization is required to take all possible steps to protect the safety of people in work place and this forms a vital part of running business. • Pump room and accessories for fire System - A fire pump is a part of a fire sprinkler, internal and external Hydrant system's water supply and can be powered by electric, diesel pump. The pump intake is Connected to the independent fire Sump. The pump provides Water flow at a higher pressure to the sprinkler system during fire emergency. The system is important to protect human life, property and safety. The system combines preventative monitoring with active fire suppression ....
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....nd input services. Relevant extract is as under: "(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the Said amount shall be credited to the electronic credit ledger of such person............" 4.2 Thus, from a bare reading of the Section, it can be seen that Section 16 of the CGST Act entitles every registered person to take input tax credit of tax charged on supply of goods or services or both which are used or intended to be used in course or furtherance of business. 4.3 The above Criteria for availment of credit is broad both in manner as well as intent. Meaning of "in the course of" or "furtherance of business" 4.4 While business has been defined under the CGST Act, the terms "in the course" "or furtherance of business" are not defined anywhere under the CGST Act or the CGST Rules made thereunder. 4.5 In the course of generally means Something "in the progress of process of". ....
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....ating to the recovery of possession" on the one hand and the terminology "for recovery of possession of any immovable property". The words "relating to" are of wide import and can take in their sweep any suit in which the grievance is made that the defendant is threatening to illegally recover possession from the licensee." 5.5 It can be Seen from the above decisions that the word 'for' has been defined to mean in the interest of, to the benefit of, in defense of, in support or favour of, etc. Based on the above rationale, it can therefore be concluded that in order to be covered by the restrictions provided under Section 17(5) (c) & (d), the goods or services must be used directly for construction of immovable property. 5.6 In other words, with reference to section 17(5) (e) (d) of CGST Act, read with the explanations provided therein, credit eligibility of goods or services or both is restricted only when the same is "for construction of an immovable property". 5.7 Also, "immovable property" covered in the above Section excludes Plant and Machinery. 5.8 Plant and machinery is defined as any apparatus, equipment and machinery fixed to earth by foundation or structural ....
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....ference needs to be taken from General Clauses Act, 1897, 7.3 Section 3(26) of the General Clauses Act, 1897 does not provide an exhaustive definition of the said expression. It reads : "immovable property" shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth." 7.4 Similarly, Section 3 of the Transfer of Property Act, 1882 does not spell out an exhaustive definition of the expression "immovable property". It simply provides that unless there is something repugnant in the subject or context 'immovable property' under the Transfer of Property Act, 1882 does not include standing timber, growing crops or grass. 7.5 Though the terms "attached to the earth" are not defined in the GST law, reference can be drawn Section 3 of the Transfer of Property Act, 1882 wherein it is defined that anything; • Rooted to the earth, as in case of trees and shrubs; • Imbedded in the earth, as in the case of walls and buildings; • Attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. 8. applicant summarises t....
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....plicant is different from "Telecommunication Tower". It was held that the infrastructure provided by the applicant is different from "Telecommunication Tower" and it is not an immovable property as it can be easily be moved to another place for use without any damage to the entire infrastructure. The infrastructure being a movable property can be classified as 'goods' in terms of section 2(52) of CGST/SGST Act, 2017. The infrastructure provided being different from Telecommunication Tower, the applicant can avail Input Tax Credit on GST paid on the goods & services in terms section 16(1) of CGST/ SGST Act, 2017, consumed while providing the supply in question. As mentioned in the facts of the cases the listed items are movable in nature and thus applying the decision of the Advance Ruling Authority, the Applicant would be rightly eligible for Input Tax credit. In view of the above, von applying three test referred above, the wooden floorings and glass partitions cannot be termed as immovable property for the following reasons: • They are not immovable property; • They cannot be said to be attached to earth; • The setting up i....
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....would be entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in course or furtherance of business". Further it is understood that credit with respect to various plant and machinery is admissible as per Section 16 of the CGST Act, 9.5 From the above, it can be inferred that the credit of input tax charged on the supply of various plant and machinery items are to be allowed as it is admissible under CGST/ SGST Act 2017. 10. Thus, the Applicant Submits that With reference to the explanation provided in section of CGST Act, the goods in question i.e. Electrical works, pumps, pumping system and tanks, lighting system, physical security system and Fire System which are in the nature of Plant and machinery Which would qualify as eligible input tax credit. 11. FINDINGS & DISCUSSION: We have considered the submissions made by the applicant in their application for advance ruling as well as the additional submissions made by Sri. Harish Bindumadhavan, Advocate, during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At ....
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....goods or services or both are used in the course or furtherance of business. Explanation.--For the purposes of clauses (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; Explanation.-- For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises." 11.5 It is pertinent to note that Section 17(5) overrides section 16(1) and any input tax credit shall not be available in respect of- (i) 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; and (ii) goods or services or b....
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....lteration or commissioning of -any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract" It is clear from the above and also the nature of supplies made to the applicant that what is received by the applicant is a Works contract Service as the outcome of the contract is an immovable property, 11.9 In continuation, the argument of the applicant is not on the nature of service received but on the point that the input tax Credit must not be disallowed as it is not capitalized as immovable property in the books of accounts of the applicant. 11.10 The Accounting Concepts prescribe for accounting of expenses and capital expenses. If the expenses are in the nature of capital expenses and are related to the fixed assets; then they are capitalized. The definition of construction only States that it includes re-construction, renovation, additions, alterations or repairs to the said immovable property and it is only an inclusive definition and hence construction of an immovable property must be seen in that Context. Further, merely accounting of an immovable property as a movable property in th....