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2023 (10) TMI 473
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....3. Briefly the facts are enumerated below for ease of understanding. 4. M/s. The Varachha Co-Op. Bank Ltd., I to 10, Affil Tower, L.H. Road, Surat-395006, Gujrat (hereinafter referred to as 'the appellant'), holding GSTIN: 24AABAT4356N1Z6, submitted that they are constructing a new administrative building and incurring cost on various services. The appellant, further submitted that they were eligible for Input Tax Credit [ITC] on the below mentioned goods and services in view of the foregoing viz: Sr. No. Nature of Cost/ Expenses Head under which expense will be booked Capitalized or not Remark 1. Central Air Conditioning Plant Plant & Machinery Yes Being Plant not covered under Immovable Property & hence ITC available. 2. New Locker Cabinet Locker Cabinets Yes Being furniture not covered under Immovable Property & hence ITC available. 3. Lift Plant & Machinery Yes Being Plant not covered under Immovable Property & hence ITC available. 4. Electrical fittings, such as Cables, Switches, NCB and other Electrical Consumables material Electrical fittings Yes Being Electrical Fittings not covered under Immovabl....
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.... a) GAAR has erred in interpreting section 17(5) of the CGST Act, 2017 whereby the ITC which was otherwise eligible to the appellant, is denied. The appellant submitted reasons and justification for each item on which ITC was claimed as follows: Central Air Conditioning System The appellant had entered into a contract for 'supply & erection' of 'Central Air Conditioning System'. Section 2(119) of the CGST Act, defines 'Works Contract'. The expression 'works contract' is limited to contracts to do with immovable property, which is defined in clause 3(26) of the General Clauses Act, 1897. Section 3 of the Transfer of Property Act 1882, further defines the phrase 'attached to earth'. The supply received by the appellant does not involve assimilation with the property and the work carried out by the supplier is only to make the plant ready for a 'wobble free operation'. Thus, the activity undertaken by the supplier cannot be considered as an 'Immovable Properly' by applying the permanency test. The appellant also relied upon the decision of AAAR of Maharashtra in the case of Nikhil Comforts [2020 (41) GSTL 417 (AAAR-GST-Mah.)] and the ruling in the case o....
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....ch is movable as well as marketable also. They further also relied on the case of M/s. Sirpur Paper Mills, supra, further, as per the Gujarat Fire Prevention and Life Safety Measures Act, 2013. the appellant is duty bound to install fire safety instruments/system at their premises, Further credit restriction is only in so far as inputs/input services' for construction of an immovable property' is concerned and does not apply to capital goods. The restriction provided under section 17(5)(c) & (d) does not apply to procurement of various inputs which are installed in their administrative building. Hence. ITC should be available to the appellant on these goods. Architect Service Fees The appellant appointed architect i.e. Mr. Jignesh Moradiya and M/s. Keystone Consultants, for structural design of building. The explanation under section 17(5) defines the expression 'construction'. In the instant case . the said expenses is not capitalized and is charged to "Profit & Loss Account' and hence ITC is admissible. Interior Designing Fees The appellant has appointed the Interior Designer i.e. M/s. Pankaj Dhakhar & Associates for "Interior Design Developmen....
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....t appeal against the order of GAAR rejecting ITC on the aforementioned items, wherein ITC stands blocked/disallowed. 12. The provisions of ITC and blocked credit provided under sections 16 & 17 of the CGST Act, 2017, states as under: (relevant extracts) Section 16. Eligibility and conditions for taking input tax credit.- (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, he 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. "Section 17. Apportionment of credit and blocked credits (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. (2) Where the goods or services or both are used by the registered person partly for effecting ta....
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....r, growing crops or grass. Section 3, further, defines the term "attached to the earth" to mean (a) rooted in the earth, as in the case of trees and shrubs, (b) embedded to earth, as in the case of walls or buildings and (c) attached to what is so embedded for permanent beneficial enjoyment of that to which it is attached. Thus, on a conjoint reading "immovable property", essentially means something which 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. 14. We now move on to examine the seven disputed supplies for which this appeal is preferred. 15. Central Air Conditioning Plant 15.1 The appellant states that they had entered into a contract for 'supply & erection' of 'Central Air Conditioning System'. Relying on section 2(119) of the CGST Act, which defines a 'Works Contract', the appellant states that works contract is limited to immovable property; that the supply does not involve assimilation with the property; that the work carried out by the supplier is to make the plant 'wobble free for operation' and hence it cannot be considere....
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....15.5 It is in this context that we would like to refer to CBEC's [now CBIC] Order No. 58/1/2002-CX dated 15.01.2002, wherein under Para 5(iii), with regards to Refrigeration/ Air-Conditioning Plants, it is mentioned as follows: "5 (iii) Refrigeration/Air conditioning plants. These are basically systems comprising of compressors, ducting, pipings, insulators and sometimes cooling towers etc They are in the nature of systems and are not machines as a whole. They come into existence only by assembly and connection of various components and parts. Though each component is dutiable, the refrigeration/air conditioning system as a whole cannot be considered to be excisable goods. Air conditioning units, however, would continue to remain dutiable as per the Central Excise Tariff. " Taking inference from the above Board's circular we find that the supply of Central Air Conditioning Plant falls under the category of works contract service supplied for construction of an immovable properly. We would also like to rely on the judgement of the Hon'ble Supreme Court in the case of Globus Stores P. Ltd., [2011 (267) ELT 435 (S.C.)] wherein it was held that air-conditioning plant is an ....
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....ng of brackets and guide rails vi) Installing of cabin door and landing doors vii) Installing of headroom components and commissioning of machine viii) Wiring in hoist way and pit ix) Completion of cabin x) Installation of belt xi) Commissioning xii) Quality inspection & handover to customer On examining the above agreement for supply of lift, we find that the same falls under the category of 'works contract' service as defined under section 2(119) of CGST Act, 2017, as it fulfills the description of the works contract service. 16.2 We find that in the case of M/s. Otis Elevator Company (India)[2003 (151) ELT 499] the Hon'ble Bombay High Court, held that lift/elevator is an integral part of immovable property, viz. [relevant extract]: "9. Having heard the rival contentions and having examined all the citations referred to hereinabove, we are clearly of the opinion that the same shall apply to the facts of this case in full force and item in question being immovable property cannot be subjected to excise under the tariff heading claimed by the Revenue. The case sought to be made out by the petitioner is al....
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....o comprehensive SI I C contract (supply, installation, testing and commissioning) with the vendor. 18.2 We find that the appellant has enclosed as Annexure VII to the appeal papers 'Proposal for solar Project by M/s. Raj Electricals'. The relevant portion, is scanned below for ease of reference viz. 18.3 On going through the above, what is forthcoming is as under:- • that the solar PV plant is for captive consumption as the energy generated is to be used in-house & only in case the available energy exceeds the demand, it would be 'exported' to the DGVCL grid via Net Metering System; • that it will have civil work with four foundations per panel; • that the entire structure is supported by nuts and bolts with zero welding which reduces the fragility during high impacts; • that it will have flexibility of setting 4 different angles 10°, 15°, 20°, 25°; that changing the angle once in summer 10° & once in winter 25°, can increase annual generation by around 6-7%. 18.4 In view of the foregoing, it is abundantly clear that the roof solar plant, affixed to foundation via nuts and bolts and which has the f....
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.... this Court, to be immovable property that ceased to remain moveable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct.... " [emphasis supplied] 19.3 In the present case too we find that there is an intention to install the 'Fire Safety Extinguishers' permanently to the building. The Fire Safety Extinguishers once fitted, no longer remains movable goods as it gets assimilated in a permanent structure i.e. the administrative building of the appellant. 19.4 As the supply and installation of fire safely extinguishers as pointed out above, makes it an immovable properly, it ceases to be a plant and machinery. 19.5 Hence, in view of the above discussions we find that the appellant is not entitled to ITC of GST paid on Fire Safety Extinguishers in view of the provisions of section 17(5)(c) of the CGST Act, 2017. 20. Architect Service Fees and Interior Designer Fees 20.1 The appellant has appointed Architect who will carry out the structural design of their new administrative building. Further they have also hired the services....