TaxTMI 
TaxTMI 
2024 (6) TMI 12
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....btained by the applicant by fraud or suppression of material fads or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as an Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s. A. Senthil Maharaj, No. 114, Race Course Road, Coimbatore Central, Coimbatore - 641 018 (hereinafter called as 'the Applicant) are registered under the GST Acts with GSTIN: 33AEQPM3966D2ZA. The Applicant is the provider of taxable service falling under the category of Renting of Immovable Property falling under Service Accounting Code (SAC): 997212 attracting GST@ 18%. 2. They have preferred this application seeking Advance Ruling on the following question: 1) Whether Input Tax Credit is admissible on the "ROTARY PARKING SYSTEM" falling under HSN Code: 8428 ....
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....e credits are blocked only in respect of the activities relating to construction of an immovable property and not for installation of parking system. The applicant submitted that the specific exclusion of plant and machinery from the category of blocked credits is illustrative of the fact that the procurement of the parking system and installation of the same cannot fall within the ambit of blocked credits, by any stretch of imagination. The applicant also submitted that as per the explanation to sub-section 6 of Section 17 of the CGST Act, 2017 / TNGST Act, 2017, 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 outside the factory premises. 4.6 Further the applicant stated that the parking system is a separately identifiable and distinct product altogether falling under HSN code: 8428 and the identity of the goods remains as such wit....
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....stem is installed as a separate facility and kept outside the building and not as an integral part. (I) Cannot be separated from the building in the normal course and relocated elsewhere, without causing damage to both the building and the equipment. Can be dismantled and installed in a location elsewhere with simple screw driver technology and without losing the identity and (iii) Installation of lift is mandatory as per the statutory provisions, under certain specified conditions. Installation of parking system is intended for enhancement of the service standards and not mandatory. (iv) Lift, being an integral and inseparable part of the building, does not contribute for furtherance of business of the taxpayer. Parking system, being a distinctly different facility, contributes for furtherance of business to fetch enhanced income and resultant GST. (v] After dismantling, the identity and essential characteristics of Lift (as well as the space in the building) would be completely lost. Even after dismantling, the essential characteristics and identity of the parking system will remain intact and would become functional with the same vigour in the....
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....be considered as movable property or immovable property. The applicant submitted that a holistic reading of the said legal provisions and the CBIC Circular would throw the guiding light on the subject matter and illustrate the factual position that parking system would continue to have the same state as movable goods at all stages. Based on the above arguments the applicant was of the opinion that they are entitled to avail the ITC on the parking system. 5.1 The applicant is under the administrative control of State Tax Authority. The concerned authorities of the Centre and State were addressed to report if there are any pending proceedings against the applicant on the issues raised by the applicant in the ARA application and for comments on the issues raised. 5.2 The State jurisdiction Officer viz. the Assistant Commissioner (ST), Trichy Road Assessment Circle stated the following; • "The applicant is proposing to install a sophisticated multi-layer car parking system to accommodate parking of 18 cars. • The applicant's claim that the car parking system is only a movable property is not correct. • The structure to be built will b....
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....r the land on which it is erected. Hence, Rotary Car Parking System is not a movable property as contested by the applicant, but is an immovable property. • Further, the applicant has informed that the said system can be easily dismantled and installed elsewhere with a simple screw driver technology. However, it is submitted that the entire car parking system cannot be moved 'as it is' and it necessarily has to be dismantled for moving the same, which is an important aspect of immovable property. • As per the explanation "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property, "Rotary Car Parking System" falls under the ambit of additions or alterations to the said immovable property i.e. in this case commercial building. In view of the above, it is submitted that the installation and commissioning of the "Rotary Car Parking System" is goods or services or both received by a taxable person for construction of 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 fur....
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.... No. PARK/260/23 dated 09.05.2023 and the 3 Tax invoices issued by the supplier thereafter are the only documents available for the impugned supply, in the instant case. The letter dated 11.01.2024 issued by M/s. Park Layer Private Limited, Coimbatore (copy enclosed) would be illustrative of this factual position. 7.4. The applicant submitted that the important features, among others, in respect of the supply, installation, testing and commissioning of Rotary Parking-SM18XL system, as per the quotation No. PARK/260/23 dated 09.05.2023 of M/s. Park Layer Private Limited, Coimbatore, are as follows: • The machines can easily be relocated to any other place depending on the customer requirement. • The machines are completely pre-fabricated to ensure faster and reliable installation process. 7.5. The applicant submitted that with regard to customer scope of works, as per the said quotation dated 09.05.2023, among others, are as follows: Work No. 2: To complete the civil foundation works as per the foundation drawings provided by Park Layer. Installation engineers from Park Layer would inspect the site on completion of the civil foundation works. An....
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....it that the activities of building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning are in respect of any immovable property, whereas car parking system is only a movable property and cannot be construed to be an immovable property, due to the following reasons. 7.9. The applicant submitted that the activity performed by the supplier in relation to supply and installation of car parking system will not fall under the category of works contract service as the activity of the Applicant comprises of various functions, as shown below: • Based on the specific requirements of the customers (the Applicant in the instant case), car parking system is designed and manufactured in the factory premises of the supplier. • After completion of the manufacturing process, the supplier would dismantle the system, transport the entire system either as a single lot or in multiple lots as per convenience, to the premises of their customers and reinstall the system in the premises of the customers. 7.10. The applicant further submitted that the entire activi....
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....der to have a proper understanding on the important aspect of coverage or otherwise of the impugned goods/services under the category of blocked credits, it would be essential to have a glimpse of the legal stipulations of Section 17 (5) (c) and 17 (5) (d) of the CGST/TNGST Act, 2017. That the essence of the aforesaid legal provisions is as follows: Section 17 (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: Section 17 (5) (c): 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; Section 17 (5) (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. 7.16. The applicant submitted that as could be seen from the above stipulations of Section 17 (5) (c) and 17 (5) (d) of the CGST/TNGST Act, 2017, the ....
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....ect natural forces with the object in each case of effecting a definite and specific result. Inclusion: such foundation and structural supports. Inference: ITC is admissible on the construction of this activity (even if it is falling under works contract service) for placing the Apparatus or Equipment or Machinery. Exclusion (from such foundation and structural supports): (i) Land, building or any other civil structures: (ii) Telecommunication towers; and (iii) Pipelines laid outside the factory premises. Inference: The above specific exclusions speak volumes of the legislative intent to the effect that ITC cannot be blocked on such foundation and structural supports for placing the Apparatus or Equipment or Machinery.). 7.20. The applicant stated that it is amply clear from the above definition that the parking system is to be construed only as a plant and machinery and not otherwise, even if the installation of the same warrants construction of such foundation and structural supports falling under the works contract service, which are essentially required for placing the Apparatus or Equipment or Machinery for the purpose of stability and achieving optimum le....
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.... that the machines can easily be relocated to any other place depending on the customer requirement. 7.26. The applicant submitted that the possibility of relocation of tire parking system on a later occasion cannot be ruled out in the case of expansion of the activity of the output service of Renting of Immovable Property, as the changing circumstances may warrant. That such relocation involving dismantling and reassembly is quite possible without causing any material damage either to the system or to the building, as could be seen from the quotation dated 09.05.2023 of the supplier of goods/sendees. 7.27. The applicant submitted that at this juncture, there may arise certain counter arguments to the effect that ITC cannot be availed on the parking system, by drawing parallel to the Lift, in respect of which ITC has been disallowed by the various judicial fora. The applicant submitted that the parking system cannot be equated with Lift, for determination of the entitlement of ITC and reproduced the distinct differentiating factors between the seemingly alike parking system and Lift which was submitted by them in their original application mentioned at para 4.6 above. 7.28....
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.... of installing a sophisticated multi-layer car parking system with highest space efficiency to accommodate parking of 18 cars in their own land, within the campus of already existing building, for the purpose of providing car parking facilities to the tenants as well as the customers of those tenants, who make frequent visits to the commercial building in connection with the official and business transactions happening on a regular basis between the tenants and their customers. According to the applicant, the parking facility is highly essential to retain the existing tenants as well as to have full occupancy state and thus the parking facility will have a bearing on the revenue earning potential of the tax payer, which would result in increased contribution to the exchequer corresponding to such earnings. The applicant claims that it is an independent installation and certainly not a part of the building and though the parking system is being fixed to the base bed, it is detachable. Further, the applicant pointed that the installation of the parking system is intended solely for the purpose of furtherance of the business, for which GST registration has been obtained. 8.4. In vi....
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....clusion of plant and machinery from the category of blocked credits is illustrative of the fact that procurements of the parking system and installation of the same cannot fall within the ambit of blocked credits, by any stretch of imagination. Further they have differentiated between the Rotary Car parking system with Lifts and stated that blocking of credit is only applicable to Efts and not to rotary parking system. 8.6 It is seen from the invoices furnished by the applicant that the car parking system is not supplied as such as a whole. But, what is supplied is constituent parts of the Car parking system viz Gauge Plate, Bolts, hex nuts, Frame Assembly and pallet with electricals. As observed from the submissions made by the applicant the vendor shall design the car parking structure based on the specific requirement of the applicant on receipt of the purchase orders from the applicant. Thereafter, the vendor have to manufacture, build, test, dismantle, pack and supply the constituent components viz Frame Assembly, pallet with electrical, electrical panels, hydraulic power packs, operator boxes and proceed to erect the same on the foundation built by the applicant. After ins....
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....at it is not attached to the earth. If the answer is yes to the latter it is attached to the earth." By applying the above test to the case on hand, as the car parking structure as such cannot be moved in the same position from the place of erection but, can only be moved after dismantling the constituent parts, the rotary car parking system in question shall fall under the category of immovable property. 8.10 Further, the applicant's contention that the parking system is not attached to earth permanently and therefore, car parking cannot be construed to have the status of the immovable property, is examined in the light of the relevant provisions of the General Clause Act, 1897 and Transfer of property Act 1882, as the term "immovable property" has not been defined in the GST Act 2017. In terms of Section 3 (26) of the General Clauses Act, 1897, the expression 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. As per Section 3 of the Transfer of property Act 1882, the phrase "attached to earth" means (a) rooted in the earth, as in the case of trees an....
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.... the contention that these machines should be treated as movables cannot be accepted." Accordingly, by applying the same principle to the facts and circumstances of the case on hand, we find that the rotary car parking has been decided to be built in the own land of the applicant, with a view to retain the existing tenants as well as to have full occupancy state. Further, it is not the case of the applicant to plan it to dismantle and move the structure to some other place. Hence, the intention of the applicant is to enjoy the benefit of the civil foundation as well as the car parking fastened to the foundation permanently, until the system ceases to exist or function. 8.11 In the light of the aforementioned judicial precedent and on the facts and circumstances of the case, the car parking system falls within the meaning of Section 3 (26), as envisaged under General Clauses Act, 1897 i.e. "permanently fastened to anything attached to the earth" and as envisaged under Clause (c) of the Section 3 of the Transfer of property Act 1882 which reads "attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached." and thus Rotary Car Parking s....
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....ment of the ground and the underlying foundation, the car parking system does not fall under the category of apparatus, equipment and machinery. As the primary object of the rotary car parking is provision of space to park vehicles, we do not agree with the applicants' view that Rotary car parking falls under the category of plant and machinery and we are of the view that the rotary car parking system falls under the exclusion clause, viz., any other civil structure. The applicant while claiming that the car parking system falls under inclusion clause of plant and machinery, has not given much emphasis on the exclusion clause. Hence, the issue has to be decided after taking in to consideration the exclusion clause also. 9.3 The term Civil Structure has not been defined under the GST Act 2017. But, in the field of Civil Engineering the term civil structure means the profession of designing and executing structural works that serve the general public, such as dams, bridges, aqueducts, canals, highways, power plants, sewerage systems and other infrastructure. Civil structures are designed and constructed to support and enhance the functioning of a community or society. The "....
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....erected on the foundation to transmit the load over the foundation and ultimately the ground which bears the load of the parking system along with the vehicles parked over it and gives stability to the car parking from falling down. 9.6 It is also noticed that in the stipulations in the "customer scope of works", as per the quotation dated 09.05.2023, importantly that the erection support to be rendered by the customer and required approvals, permissions, local union charges, approvals and other local body issues rests with the scope of customer. With, regard to the above when the applicant was enquired upon whether any approval has been obtained from the competent authority for installation of the car parking system, the applicant has replied that no approval has been obtained from the competent authority for installation of the car parking system in the business premises of the Applicant and there is no statutory requirement for obtaining any approval or licence or permission from any authority for such installation of a car parking system. The Applicant has also stated that in contrast, installation of lift warrants grant of approval from the Local body or Local Planning Auth....