AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 126
X X X X Extracts X X X X
X X X X Extracts X X X X
....on reference to both CGST Act and TGST Act. 3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- under SGST and Rs. 5,000/- under CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided nor are pending before any authority under any provisions of the CGST/TGST Act' 2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98(2) of TGST Act' 2017. 4. BRIEF FACTS OF THE CASE: 4.1 The applicant M/s. Sanghi Enterprises has claimed that they are constructing shed on a leased land and that such property being constructed is a pre-fabricated shed system. They made the following submissions in their application: Submission-1: It is fixed by anchor bolts to a low RCC platform embedded to the ground, and it is the only civil structure. Submission-2: The rest of the structure, like columns, beams, rafters, wall sheets, roof shed etc. are all joined with one another by nuts....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a taxable person for an immovable property or shall not be amenable for claiming input tax credit. Therefore the applicant desires to obtain a clarification whether the goods shed erected by him using prefabricated structures by way of nuts & bolts is an immovable property or a movable property. The applicant relies on the Hon'ble Apex Court's orders in the case of Solid & Correct Engineering Works [(2010) 252 ELT 481 (SC)] and Sirpur Paper Mills Ltd [97 ELT 3 (SC)]. As seen from the facts of the case the appellant erects a warehouse using prefabricates structures. The overlying structure along with the land on which it erected constitutes the warehouse. The warehouse is meant for storage activity and therefore is associated with the beneficial enjoyment of the land on which it is constructed. It is seen from the Sirpur Paper Mills Ltd case that the facts of the case pertains to assembling of a machine from its components and attaching the same to the earth for the operational efficiency of that machine. Therefore the attachment made was not for the beneficial enjoyment of the land to which it was attached. Hence, the law laid down by the Hon'ble Supreme Court of India in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....both which are used or intended to be used in the course or furtherance of business. 9.1.2 However, as per Section 17(5) of the CGST/TGST Act' 2017 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 construction of an immovable property. The term 'construction' in this section is limited to supplies to the extent capitalized to an immovable property. 9.1.3 Therefore the applicant desired to obtain a clarification whether the prefabricated shed (hereinafter referred to as "PFS") erected by him using prefabricated structures by way of nuts & bolts is an immovable property or a movable property. The applicant relies on the Hon'ble Apex Court's orders in the case of Solid & Correct Engineering Works [(2010) 252 ELT 481 (SC)] and Sirpur Paper Mills Ltd [97 ELT 3 (SC)]. 9.1.4 The applicant is engaged in construction of prefabricated shed (PFS). They procure goods and services from various contractors for fitting out the prefabricated shed (PFS). They discharge the GST liability with regard to such procurement. The applicant also submitted that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xtent of capitalisation, to the said immovable property; 9.5 Now, as per the definition of goods in the Section 2(52) of the CGST/ TGST Act, 2017 mentioned supra, some movable property is excluded from the category of goods whereas at the same time, some immovable properties are treated as goods. But the terms "movable property" and "immovable property" have not been defined under the GST Act. 9.6 In laymen terms, any goods that can moved is a movable property and which cannot be moved is immovable property. But the General Clauses Act 1897 and the Transfer of Property Act defines both these terms. Section 3(26) of the General Clauses Act' 1897 says: [3. Definitions.-In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,- (26) "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". (36) "movable property" shall mean property of every description, except immovable property;] As per this to qualify as "immovable property" those things sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at is so imbedded for the permanent beneficial enjoyment of that to which it is attached. 9.9 Section 3 of the Transfer of Property Act, 1882 gives clarity on the expression "attached to the earth" which in turn gives clarity on the definition of "immovable property" as defined under Section 3(26) of the General Clauses Act. It clarifies that anything attached to what is so imbedded for the permanent beneficial enjoyment, but does not include standing timber, growing crops or grass, comes under the category of "attached to the earth" which makes it to come under definition of `immovable property'. Section 3(26) of the General Clauses Act, 1897, provides "things attached to the earth, or permanently fastened to anything attached to the earth" as an exhaustive definition of the "immovable property". 9.10 As per the definition of immovable property contained in the General Clauses Act and the Transfer of Property Act, it is clear that things attached to the earth or permanently fastened to anything attached to the earth is immovable property. Anything imbedded in the earth or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attach....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the course of business permanently beneath it. 9.13.3 Even if the concrete structure is not imbedded in the earth but rests on the earth, it can be concluded that it is naturally attached to the earth by way of gravitational pull of the earth as they would not have allowed the structure to be placed on earth if it is not stable and without stability it would not serve the purpose of allowing the person to conduct business beneath it. A stable structure enables beneficial enjoyment of the land on which it is being built. Therefore even if the structure is merely placed on earth and would remain stable and permits to conduct business operations beneath it, it shall be deemed to be attached to the earth as it is not removed under ordinary circumstances, it may be considered permanently fastened to anything attached to the earth. The structure, even if it is merely placed on land, enables beneficial enjoyment of the land on which it is being built. 9.14 Further, when any object is said to be imbedded in earth, it does not mean that a part of it is to be inserted/ put deep beneath the earth by digging the earth for several meters. For laying any foundation especially in case of a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of that to which it is attached. Prefabricated shed, attached to RCC platform embedded on earth, forms an integral part of the property. 9.17.3 'PFS' structure does not fulfil the test of whether the "'PFS' structure can be dismantled and sold in the market or not." This is because 'PFS' structure attached to the RCC platform is not Saleable like papermaking machine. 9.18.1 In the case of decision by Apex Court in respect of Commissioner Of Central Excise, Vs. Solid & Correct Engg. Works & Ors, in Civil Appeal Nos.960-966 of 2003, the Apex Court, while examining whether a machine, fixed with nuts and bolts to a foundation, with no intent to permanently attach it to the earth, is an immovable property or not, has held that such an attachment without necessary intent to making it permanent cannot be an immovable property. The emphasis is on the intention of the party. The Apex Court observes that the machine in question can be moved and has indeed been moved after the road construction and repair project, for which it was installed, is completed. However, if a machine is intended to be fixed permanently to a structure embedded in the earth, the moveable character of the mach....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the GST Act, if the article attached to the earth is not agreed to be severed before supply or under a contract for supply, it ceases to be goods and, for that matter, a moveable property. 9.23 In this connection, reference may be made to clause 4(v) of the Circular No. 58/1/2002-CX dated 15/01/2002, where it is concluded that "if items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as moveable and will, therefore, not be excisable goods." Clearly, the 'PFS' cannot be relocated by unfixing the pre-fabricated structures alone. The dismantling of the floor, which is the most important component of the 'PFS', is not possible without substantial damage to the foundation. 9.24 The essential character of "immovable property", as emerges from the above discussion and relevant to the present context is that it is attached to the earth, or permanently fastened to anything attached to the earth, or forming part of the land and not agreed to be severed before supply or under a contract of supply. 9.25 Now, section 17(5)(d) bars an....