TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 876
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....hysical 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 procurement of goods and services or both received by the taxable person for co....
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....e 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 encases the pumping System. * Tanks - The primary function of a tank is to store liquid Substance required for daily activities. Domestic Water storage is a necessity due to natural occurrences such as droughts. They provide water for drinking, firefighting, gardening, for other l....
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....s, 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 Shutters don't rattle during high winds & offer a thick wall of insulation from the elements. In addition to weather protection, security, privacy' & light control, roller shutters provide the additional benefit of reducing the noise coming from outside. Shutters also give you huge amount of control over the amount of light that enters the room. We can choose to Completely darken the room by lowering the ....
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....nization 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 mechanism, rapidly extinguish a fire before it Spreads. * Fire alarm system - These are used to alarm people around in case of smoke, fire etc. by using audio and visual appliances. Fire alarm systems are crucial to fire safety. The main advantage of installing fire alarms is the early Warning benefit. The fire alarms can be installed just about anywhere in a commercial building and best of all the fire safety measure is highly cost effective for Smoke and fire protection. This early warning signal is extremely important to life safety for the following reasons: ....
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....ed 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". 4.6 The meaning of "Furtherance" as per Black's law dictionary: 6th edition 11th reprint 1997, is "act of furthering, helping forward, promotion, advancement or progress". 4.7 Furtherance of business will, thus mean, act of furthering business, helping forward business, promotion of business, advancement of business of business of progress of business. 4.8 As mentioned above, the Applicant is into the business of building and managing industrial warehousing spaces for consumers and industrial centers and all the subject electrical works, pumps, pumping systems and tanks, lighting system, physical security system and fire system helps in giving value add to its Industrial customers and managing the Ind....
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....) (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 support (to be precise, immovable plant and machinery) but does not include:- i. Land, building or any other civil Structures; ii, Telecommunication towers; and iii. Pipelines laid outside factory premises Credit restriction is with respect to construction only When capitalized as immovable property 5.9 Further, the Applicant submits that for the purposes of clause (d) of section 17(5) of CGST Act, the expression 'construction' has been defined to include re-construction, renovation, additions or alterations or repairs, to the extent of capitalization of the said immovable property. 5.10 The Applicant in this regard submits that, so far the business activity of the applicant is concerned, the items listed in Appendix I are not capitalised as immovable property but are in fa....
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....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 the entire submissions as under: Particulars Category Property type Whether movable or immovable Eligibility criteria Ring Main unit Electrical works Plant and Machinery Movable Plant and Machinery - any apparatus, equipment and machinery fixed to earth by foundation or structural support. These items are immovable in nature and classified as Plant and machinery. Hence these are specifically excluded from Section 17 (5)(c) & (d) Receptacle system - plug socket Electrical works Plant and Machinery Movable Pumps Electrical works Plant and Machinery Movable Street light poles, High mast Electrical works Plant and Machinery Movable Pump room and accessories Fire system Plant and Machinery Movable Fire Alarm system Fire system Plant and Machinery Movable Fire Protection Systems Fire System Plant and Machinery Movable LED Internal light f....
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....erty for the following reasons: * They are not immovable property; * They cannot be said to be attached to earth; * The setting up itself is not intended to be permanent at a given place. It can be moved based on business requirements. 9.2 The Applicant further places reliance on the advance ruling issued by the Authority of the advance ruling in the, case of M/s. BAHL Paper Mills Ltd = 2018 (6) TMI 431 - AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND, where the question was whether Credit will be available on office fixtures & furniture, AC, plant & sanitary fittings on the newly constructed building on its own account, for furtherance of business, and is capitalized in books of accounts. It was held that as per the explanation to Section 17 of the CGST Act, availment of credit was not admissible in respect of land, building or any civil structure; therefore Sanitary fittings being the integral part of the land was not an admissible credit. However, credit of GST is available on office fixtures & furniture, A.C. plant. The said advance ruling has placed reliance on the CBIC Board Circular No. 943/04/2011-CX dated 29th April 2011 wherein it was clarified that the goods such as f....
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....aring. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 11.1 It is evident that the applicant is engaged in the building and managing industrial warehouse spaces for consumers and industrial centres. The applicant is proposing to construct a new Industrial warehouse at Bagus Village in Karnataka and the amenities provided include truck parking, canteens, rest areas, dormitories, business centres etc. ensuring that the park becomes a self-sustaining business environment and contribute towards national development and sustainability, while embodying the various objectives of the Governments as advantages. 11.2 The applicant has Stated that he procures various goods and services from various contractors for fitting out of the warehouse spaces and provides the subject space having all facilities and infrastruct....
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....(ii) goods or services or both received by a taxable person for construction of an 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. The term construction includes re-construction, renovation, additions or alternations or repairs to the extent of capitalization to the said immovable property, 11.6 The term construction includes additions to the immovable property to the extent of capitalization. Nowhere is it said that the capitalized amount needs to be declared as in the books of accounts within the value of immovable property i.e. buildings. The Accounting Standards which enumerate the classes of Fixed Assets being land and buildings, furniture and fixtures, etc. does not classify property as movable and immovable property and an asset classified as fixture could still be immovable property within its meaning. In case of any immovable property, if the asset qualifies to be an immovable property but shown as a discrete element in the books of accounts, it still remains an immovable property. Mere declaration of the same under a different class of Fixed Assets does....
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....n the books of accounts of the applicant does not divest the exact nature of the item and when what is procured is an immovable property, it remains a immovable property, no matter how the same is accounted. 11.11 Further, the applicant argues what is procured are goods as they can be moved. It is clear that the input is a Works contract service as admitted by the applicant himself and is a composite supply involving both goods and services With the outcome being an immovable property and hence this is not applicable. 11.12 The only argument that needs to be examined is whether these are covered under "plant and machinery" as envisaged in Section 17(5) of the CGST Act. 11.13 The Explanation to Section 17 of the CGST Act States as under: "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 outs....