TaxTMI 
TaxTMI 
2020 (10) TMI 1334
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.... Hotels Private Limited (hereinafter also referred to as the "appellant") against the order of Authority for Advance Ruling No. 10/2020 dated 08.06.2020 3. BRIEF DISCRIPTION • The company Jabalpur Hotels Private Limited was incorporated on 13th March 2018. The company was established with an object to construct Hotel in Jabalpur at Mauza Ghana Khasara No 195/14, 195/2, 194 Nagpur Road, Jabalpur. • Company started construction of Hotel and completed a major part of its work. • The Hotel is in construction stage and the promoters of the hotel have some doubt on the issues of Input Tax Credit under GST hence preferred to file Advance Ruling before the Authority. 4. STATEMENT OF FACTS- • Jabalpur Hotels Private Limited is constructing a Hotel at Mauza Ghana Khasara No 195/14, 195/2, 194 Nagpur Road, Jabalpur. • The hotel will be multi storied hotel and will have approx. 100 rooms. • The hotel will be equipped with other facilities such as gym, spa, swimming pool, restaurant, banquet hall, marriage lawn and garden etc. • As there will be some rooms of the hotel which would have declared tari....
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....it is provided. • Section 17(5) blocks credit of works contract and goods or services received by a taxable person for construction of an immovable property (other than plant and machinery, hence the order of AAR is bad in law and need to be deleted. • As Lift/escalator is a machine and it falls under HSN 8428 and hence excluded from block credit as specified in section 17(5). AAR misinterpreted the same. • The lift install in the Hotel is a Hydraulic lift and can be installed and un-installed without damaging any part of building. Hence the order of AAR is bad in law. • The assessee craves leave to raise any other ground/(s) on or before the date of personal hearing to prove that the order is bad in law. 1. INTERPRETATION OF LAW- 1.1. SECTION 17(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely- a. - - - - - - b. - - - - - - c. - - - - - - d. goods or services or both received by a taxable person for construction of an immovable property (other than plant or m....
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....nes laid outside the factory premises. 1.4.2. The above explanation intends to say that the plant and machinery includes certain foundations and structures however certain structures and foundations are excluded from Plant and Machinery and these are, land, building or any other civil structures, telecommunication towers and pipelines laid outside the factory premises. 1.4.3. The officer misinterpreted the above explanation and concluded that any plant or machinery attached to land, building or any other civil structures, telecommunication towers and pipelines laid outside the factory premises shall not be considered as plant and machinery. This is an incorrect interpretation of the explanation. 1.5. The officer has agreed that if a plant and machinery is installed on a foundational structural support thus, that structural support is plant and machinery but the lift which is a plant and machinery but since installed in building, the lift per say becomes part of building. Hence, it required to be examine as to whether a lift is an immovable property (i.e., part of a building) or whether it could be regarded as 'plant and machinery'. 2. DISCONSIDERATION OF LIFT AS....
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.... is permanently attached so as to make it permanent fixture on land or another immovable property, one cannot contend that the intent of so doing is to enjoy the fixture. 2.3. The lift installed in the building for the purpose of furtherance of business cannot be deemed to be a part of the building or an immovable property just because of the fact that it was fastened in the civil structure of the building by way of nuts, bolts and fasteners. 3. The assessee places reliance in the Judgment of Supreme Court where Honourable Supreme Court held machine is not immovable property: 3.1. Sirpur Paper Mills Ltd. vs. Collector of Central Excise, Hyderabad (1998 (1) SCC 400)-CEGAT recorded finding that whole purpose behind attaching machine to a concrete base was to prevent wobbling of machine and to secure maximum operational efficiency and also for safety. Supreme Court held that in view of those findings it was not possible to hold that the machinery assembled and erected by the appellant at its factory site was immovable property as something attached to earth like a building or a tree. The test, it was noted, would be whether paper-making machine could be sold in market and ....
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....ry in order to be treated as fixture. Attachment to the earth must be as defined in Section 3 of the Transfer of Property Act. For instance a but is an immovable property, even if it is sold with the option to pull it down. A mortgage of the super structure of a house though expressed to be exclusive of the land beneath creates an interest in immovable property, for it is permanently attached to the ground on which it is built. 3.2.2. The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the land or building. Machinery for metal -shaping and electro - plating which was attached by bolts to special concrete bases and could not be easily removed, was not treated to be a part of structure or the soil beneath it, as the attachment was not for more beneficial enjoyment of either the soil or concrete. Attachment in order to qualify the expression attached to the earth, must be for the beneficial attachment of that to which it is attached. Doors, windows and shutters of a house are attached to the house, which is imbedded in the earth. They are attached to the house which is imbedded in the earth for the benefici....
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....en erected permanently without being shifted from place to place . It was pointed out that the test was one of permanency; if the chattel was movable to another place of use in the same position or liable to be dismantled and re -erected at the later place, if the answer to the former is in the positive it must be a movable property but if the answer to the latter part is in the positive then it would be treated as permanently attached to the earth. 4. Incidences when SC held what is immovable property- 4.1. T.T.G. Industries Ltd. V. CCE, Raipur 2004 (167) ELT 501 (SC), the machinery was erected at the site by the assessee on a specially made concrete platform at a level of 25 ft. height. Considering the weight and volume of the machine and the processes involved in its erection and installation, this Court held that the same was immovable property which could not be shifted without dismantling the same. 4.2. Essar Telecom Infrastructure Pvt. Ltd. (supra)on Mobile Towers by Karnataka High Court, which differed with the view of Bombay High Court's judgment in Hutchison Max Telecom P Ltd [(2008) 224 ELT 191 (Bom)]. However mobile towers are standalone entities erected us....
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....rovision of service portion in execution of a works contract or construction services. 7.2.2. INPUT SERVICES UNDER SERVICE TAX- The definition of input services excludes- A. service portion in the execution of a works contract and construction services including services listed under clause (b) of section 66E of the Finance Act (hereafter referred to as specified services) in so far as they are used for - * construction or execution of works contract of a building or a civil structure or a part thereof; or * laying of foundation or making of structures for support of capital goods, except for the provision of one or more of the specified services; 7.2.3. PROVISION OF SECTION 17(5) OF CGST ACT 2017- As per section 17(5)(c) of the CGST Act, 2017, input tax credit shall not be available in respect of the 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. As per Section 17 (5)(d) of CGST Act 2017, ITC shall not be available for any goods or services used by a taxable person for the construction of immov....
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....places reliance on the following judicial pronouncements although these judgments have been pronounced under the erstwhile CENVAT Credit laws - 7.5.1. M/s. Rattha Holding Co. Pvt. Ltd. Vs Commissioner of Central Services Tax, Chennai (2018 (9) TMI 1722) - wherein the Hon'ble Chennai Tribunal held that disallowance of credit of input service used for Construction of buildings is unjustified. 7.5.2. Commissioner of Central Excise, Vishakhapatnam-II vs M/s. Sai Samhmita Storages (p) Ltd. (2011 (2) TMI 400) - wherein the Hon'ble Andhra Pradesh High Court held that the assessee used cement and TMT bar for providing storage facility without which storage and warehousing services could not have been provided and the finding of the original authority as well as the appellate authority are clearly erroneous. 7.6. Further, the following judicial pronouncements permit claim of CENVAT credit on goods or services or both used in fabrication of parts, components, accessories of the plant and machinery. It has been consistently held that the parts, components, accessories come into existence before the installation of the machinery and credit of taxes paid on the same cannot be d....
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.... (c) - - - - (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" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property. * As per the Section 17 (5) of CGST Act mentioned above, the Input tax credit shall not be available on the goods and 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 definition of immovable property is not provided under GST Act. According to section 3 (26) of the General Clauses Act, 1882, "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". According to section 3 of the Tra....