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2020 (3) TMI 981
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....use', 41, Vittal Mallya Road, Bangalore 560001 (herein after referred to as Appellant) against the advance Ruling No. KAR/ADRG 103/2019 dated: 30th sept 2019 = 2019 (10) TMI 1021 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. Brief Facts of the case: 3. The appellant is developing a shopping Mall - 'Mantri Arena Mall' which will include a hypermarket, multiplex cinema theatre complex, departmental stores, retail shops and food courts. The Applicant has entered into various lease agreements with their customers / tenants (Service recipients) and will be leasing all unit(s) at the Mall together with the right to use the staircases, common areas and other common facilities. 4. To undertake development of the said property, the appellant is required to procure numerous goods and avail numerous services including works contract service from many suppliers. Accordingly, the appellant placed purchase orders on various suppliers for goods and work order on various suppliers for services and the suppliers have raised invoices on the appellant. 5. Amongst other goods and services, the appellant has procured goods and / or services for the installation of Chillers, Air Handling Unit (....
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....-mechanical equipment in the building. x. Transformers - This equipment bring down the voltage of the power supplied by BESCOM, as per stipulated norms. xi. Electrical wiring and fixtures - These fixtures, through cables & wires, carry power to various electro-mechanical equipment and are related to lighting and associated accessories. xii. Public Health Engineering (PHE), Fire-fighting and water-management pump system - This is essential for life safety of the building which includes Fire protection and detection, and water supply management for the building. All the above-mentioned installations are used, directly or indirectly, for making outward supply of services (i.e. lease rentals.) 6. The appellant sought advance ruling in respect of the following question: Whether taxes paid on procurement of goods and/or services for installation of the following, are regarded as blocked credits under Section 17(5) of the CGST Act, 2017? (a) Chillers, (b) Air Handling Unit (AHU), (c) Lift, Escalators and Travellator, (d) Water Treatment Plant (WPP), (e) Sewage Treatment Plant (STP), (f) High Sp....
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....dicial pronouncements which attempt to determine whether an item is a 'machinery' or not and to justify their case that all the installations of the appellant qualify as "Plant" or "Machinery": a) Corporation of Calcutta vs Chairman of the Cossipore and Chitpore Municipality - AIR 1922 PC 27 = 1921 (7) TMI 1 - BEFORE THE PRIVY COUNCIL b) Industrial Machinery Manufacturers Pvt Ltd vs State of Gujarat - 16 STC 380 = 1963 (11) TMI 81 - GUJARAT HIGH COURT. c) Ambica Wood Works vs State of Gujarat - 43 STC 338 = 1978 (12) TMI 166 - GUJARAT HIGH COURT d) Dani vs State of Karnataka - 44 STC 276 = 1979 (7) TMI 215 - KARNATAKA HIGH COURT e) India Leaf Spring Mfg Co (P) Ltd vs Commissioner of Income Tax - 1989 175 ITR 639 AP = 1988 (6) TMI 23 - ANDHRA PRADESH HIGH COURT f) Sirpur Paper Mills Ltd vs CCE, Hyderabad - 1998 (97) ELT 3 (SC) = 1997 (12) TMI 109 - SUPREME COURT 8.5. The appellant also relied on the analogy of certain judicial pronouncements rendered under the erstwhile Cenvat Credit laws, wherein it has been held that Cenvat credit of inputs/input services used for construction is admissible. a) M/s. Rattha Hol....
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....he books of accounts under separate heads as per Indian Accounting Standards which is sufficient justification that these installations are distinct from the land and building. Hence the same do not form a part of the exclusion portion of the explanation to Chapter V and Chapter VI of the CGST Act, 2017 and are accordingly, not excluded from the definition of "Plant and Machinery". 8.9. They further submitted that although the installations are fixed to the building/earth, they qualify as "Plant" or "Machinery" under the CGST Act and accordingly the taxes paid on procurement of goods or services for such installations should not be regarded as blocked credits in terms of Section 17(5)(d) of the CGST Act read with Explanation to Chapter V and Chapter VI of the CGST Act PERSONAL HEARING 9. The appellant was called for a personal hearing on Jan 2020 but the same was postponed to 31 st Jan 2020 on their request. The appellant was represented by Shri. Badrinath N.R, Chartered Accountant who reiterated the submissions made in the grounds of appeal. He stressed on the submission that the term "Plant" is to be looked at independently and not in conjunction with 'machinery'. He sub....
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.... appellant is entitled to credit of input tax charged on any supply of goods and/or services made to the appellant and used by the appellant in furtherance of his business. However, this is subject to the conditions and restrictions as specified in Section 16(2) and Section 17 (5) of the CGST Act, 2017. Section 17(5) of the CGST Act, 2017 stipulates the situations wherein input tax credit shall not be available notwithstanding anything contained in Section 16(1) of the said Act. We are concerned with the provisions of clause (d) of Section 17(5) of the said Act. 13. Section reads as follows: (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely: - ... .... .... .... .... .... .... ... ... .. (d) 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. Explanation: For the purposes of clauses (c) and (d), the expression "construction....
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....e". Where provision is clear and unambiguous the word 'or' cannot be read as 'and' by applying the principle of reading down. But if the literal reading of the words produces an unintelligible or absurd result 'and' may be read for 'or' and 'or 'for 'and' even though the result of so modifying the words is less favourable to the subject provided that the intention of the Legislature is otherwise quite clear. Conversely if reading of 'and' and 'or' produces grammatical distortion and makes no sense of the portion following 'and', 'or' cannot be read in place of 'and'. The alternatives joined by 'or' need not always be mutually exclusive." 16. Applying the above principle to the instant case, we are of the opinion that in this case, the word 'or' in clause (d) of Section 17(5) of the CGST Act can be read as 'and' since it appears to give effect to the intention of the legislature to allow input tax credit on the construction of plant and / or machinery. Therefore, we are of the view that this argument of the appellant is not of much relevance. We will not labour over the case laws cited by the Appellant on this issue, as we do not rely upon those submissions of the Appellant. 1....
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....procurement and installation of Chiller, Air Handling Unit, Indoor/Outdoor Surveillance System (CCTV), electrical wiring and fixtures, Public Health Engineering (PHE), Fire-fighting and water management pump system. 20. As regards the Lift, Escalator, Travellator, Water treatment Plant, Sewage Treatment Plant, HSD yard, Mechanical Car Park, DG Set and, Transformers no information is furnished as to who is doing the installation of the said items. Therefore, we will examine the issue based on the available documents. It is seen from the copies of invoices furnished by the appellant that, in the case of Lifts, escalators and travellator, the vendor M/s OTIS Elevator Company has entered into a contract with the appellant for the supply and installation of passenger lifts, service lifts, escalator and travellator at the project site. No doubt lifts, escalator and travellators are fixed to the earth with structural supports and they qualify as plant and machinery. However, it appears that the supply of the lifts and its installation at the project site of the appellant are done by the vendor M/s OTIS. In such a case, M/s OTIS will not be hit by the restriction imposed under Section 1....