TaxTMI 
TaxTMI 
2024 (6) TMI 12
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....erial 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 3. The Applicant submitted a copy of challan evidencing payment of app....
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....f 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 with the same characteristics, prior to installation and even after the product is embedded to earth by bolt....
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....arated 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 relocated area. 4.8 The Applicant further submitted that they would like to state that the fundamental question that may arise in the instant....
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....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 be property of immovable on completion of the construction and the structure is to be treated as capital asset to the applicant so long as the existence in business and the use of the structure for parking of car....
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....nstalled 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 furtherance of business and hence ITC is not admissible as per section 17 (5) (d) of the CGST Act, 2017. 6. The Applicant, was given an opportunity to be heard in person on 9.1.2024. Shri Arthanarisamy, proprietor and Shri K. Rajendran, Authorised Representative (AR) ap....
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....actual 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. Any violations from the furnished drawings would be intimated and corrections to be made accordingly. Work No. 3: Erection support to be rendered by the customer. Required approvals, permissions, local union charges, approvals and other local body issues in the scope of customer. Work No. 4: To provide lighting, ventilatio....
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....ue 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 activity of the supplier relating to supply of the car parking system and installation thereof are duly classified under the GST Tariff and Service Accounting Code (SAC), as follows: Activity Classification Supply of goods, namely other lifting, handling, loading or unloading machinery (For example, Lifts, escalators, conveyors, teleferics). HSN code: '8428 Other install....
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....b-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 credits are blocked only in respect of the activities relating to construction of an immovable property and not for the installation of parking system, which is to be considered as plant and machinery, in strict sense. The applicant submitted that the specific exclusion of plant and machinery in the said Sections of the GST Act is illustrative of the fact that procurement of the parking system and installation of the same....
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....i) 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 level of functioning of the plant and machinery. 7.21. The applicant submitted that as per the scope of works to be executed by the recipient of the goods/services, the civil foundation works are to be completed by the applicant in the instant case, as per the foundation drawings provided by the supplier of goods/services (Park Layer). That it is clear that the parking system is simply installed on the existing civil foundation, as an independent equipment and the disassembly of ....
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....he 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. The applicant submitted that in respect of the question relating to admissibility of ITC on the parking system, being the input/input service for providing the output service, there are two legally permissible options available for them to result in two possible scenarios, which are listed below: Provision of output service - (i) To the tenants, exclusively: As a Composite supply of services, comprising of the existing service of Renting of Immovable Property falling under SAC: 99....
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....ity 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 view of the above, the applicants have purchased Smart Parking 18XL Part Assembly and their constituent parts, as can be seen from the invoices submitted by the applicant, as detailed below: Sl.No. Invoice No./dt. Description of Goods Price CGST SGST 1 PL/77/23-24 DT. 19.9.2023 Smart Parking 18XL Part Assembly, bolt 16 nos, hex nut 32 nos, Gauge plate 4 nos 40000 3600 3600 2 PL/135/23-24 Smart Parking SM18XL Part Assembly-Frame assembly 4523000 407070 407070 3 PL/137/23-24 Smart Parking SM18XL Part Assembl....
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....f 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 installation only, it takes the shape of the car parking. 8.7. On further perusal of the Quotation of M/s Park Layer Private Limited, vide Quote Number PARK/260/23, dt. 09.05.2023, furnished by the applicant, it is found that the Customer Scope of Work involves completing the civil foundation works as per the foundation drawings provided by Park Layer and on completion of the civil foundation work, it will be inspected by the installation engineers from Park Layer, who are the suppliers of the Rotary Car Parking System. Any violations from the furnished drawings would be intimated and corr....
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....rty, 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 and shrubs; (b) imbedded in the earth, as in the case of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. In the Tax Revision case 910/2001, in respect of the Commissioner Trade Tax U.P. Lucknow Vs S/S Triveni N.L. Ltd., the question raised was, "as to whether the Trade Tax Tribunal is legally correct to allow dealer's claim of exemption on the ground that the machinery installed is immovable property being attached to earth even though the machinery was installed and attached to earth for better functioning and operationa....
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....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 system is not a movable property as contested by the applicant. 9.1 Whether the Rotary Car parking falls under the category of plants and machine? The query as to whether the credit is blocked by the Section 17 (5) of the Act and the claim of the applicant that the specific exclusion of plant and machinery from the category of blocked credits is examined as follows: The relevant provision of Section 17 of the CGST Act, 2017 is reproduced below: "(5) Notwithstanding any thing 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....
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....n 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 "Structure" in the context of civil Engineering refers to anything that is constructed or built from different inter-related parts with a fixed location on the ground. The civil structure is manmade structure built by utilising any material viz., cement, steel based on requirement and purpose of the structure. 9.4 Further, we find that the Tamil Nadu Combined Development and Building Rules, 2019 defines the terms "Building" and "Structure" as follows; "Structure" means something constructed or built having a fixed base on or other connection to the ground or other. "Building" means any structure for whatsoever purpose and of whatsoever materials constructed and every part thereof whether used as human habitati....
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....s 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 Authority (LPA) for lift installation as part of the building and Grant of lift licence by the Electrical Engineer of the State Government. With regard to the above we find that in terms of Rule 39(5) read with Annexure IV, of the Tamil Nadu Combined Development and Building Rules, 2019, in respect of Automated/ mechanically operated parking system, the Executive authority notwithstanding anything containing in the rules subject to such conditions as may be decided by the executive authority may permit lots/ structures taking into account the safety and environmental aspects. Hence, for installation of rotary car parking system it is felt that prior approval of the competent executive authority is essential in view of the safety and environ....