TaxTMI 
TaxTMI 
2024 (6) TMI 109
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....R/R/33/2021 dated 30.7.2021, passed by the Gujarat Authority for Advance Ruling [GAAR]. 3. Before the GAAR, the appellant had raised the following question viz "The applicant wishes to know the admissibility of input tax credit (ITC) of GST paid on the procurement of plant and machines [mentioned in para 3-above) including the services of installation and commissioning the same in terms of the provisions of section 16 and 17 of the CGST Act, 2017." Very briefly put, the facts are that the appellant was establishing a new factory in Vadodara, Gujarat. Primarily, the appellant wanted to know whether they were eligible lor ITC in respect of [a] Air conditioning and cooling system and [b] Ventilation system -Plant and Admin. 4. By the impugned ruling dated 30.7.2021, the GAAR held that the appellant was not eligible for ITC on Air conditioning and cooling system and Ventilation system since they are blocked credit falling under section 17 (5) of the CGST Act, 2017. 5. The GAAR arrived al the above ruling on the basis of the below mentioned findings viz: • that the appellant had awarded a single work order dated 1.9.2020 to M/s. Skai Air Control P Ltd t....
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....ombay v/s Indian Oil Corporation Ltd. [199 Suppl. SCC 18], laid down the test of permanency; that the air conditioning system cannot be taken as such to the market for sale and cannot be shifted from one place to another as such and further can be shifted only after dismantling; that the Air Conditioning system once installed and commissioned in the building is transferred to the building owner and this involves transfer of property; • that the supply and erection of Central Air conditioning system merits classification under works contract service; • that such supply of centralised air conditioning plant is covered under section 17 (5) (c) of the CGST Act; • that ventilation system is a combination of various components and parts & result into an immovable property; • that 'Ventilation system' once installed and commissioned in the building is transferred to the building owner and this involves the element of transfer of property; that 'Ventilation system merits to be classified as work contract supply as the system per se is an immovable property 6. The appellant feeling aggrieved by the impugned ruling is before the Gujarat ....
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....intention of the circular was to determine whether it is excisable goods or otherwise; • that even if ail the machines are part and parcel of HVAC System, the HVAC system is also a machine entrusted to provide cooling for all production processes and area and hence ITC cannot be disallowed under section 17 (5) (c) of CGST Act: • that in any case the classification under Customs Tariff arises in case of outward supply; that the appellant is seeking a ruling regarding the eligibility of Input Tax Credit on the parts or sub-system of such air conditioning and cooling system; • that the facts of the case in Municipal Corporation of Greater Bombay & Ors. v/s Indian Oil Corporation Ltd. [199 Suppl. SCC 18] neither relate to installation of Air Conditioning and Cooling System and Ventilation System nor eligibility of ITC; • that since all the parts/machines can be dismantled and taken elsewhere without any substantial damage, the machines/ assets forming part of HVAC system are movable; • that under section 17 (5) (c), ibid. Plant & Machinery are specifically excluded: • that the 'Ventilation system' merits to b....
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....he said taxable supplies including zero-rated supplies. ..................... ........................ (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:- (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: (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. "Ear 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; Explanation - For the purposes of this Chapter and Chapter VI. the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or st....
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....nothing but a group of inter-related and inter-dependent machines performing a desired task; that the HVAC system is also a machine; that though the machines become part of an Air conditioning system, the individual machines do not lose their identity; that the HVAC system is also a machine entrusted to provide cooling for all production processes and area and hence ITC cannot be disallowed under section 17 (5) (c) of CGST Act. Similar grounds have been taken even for the ventilation system installed in Plant and Administration. 13.2 A conjoint reading of sections 16 (1) and 17 (5) (c), ibid, shows that ITC can be availed by a registered person subject to conditions and restrictions prescribed on any supply of goods or services or both, which are used or intended to be used in the course of furtherance of his business. The restrictions imposed [as far as the present context is concerned[ is that ITC is not eligible for works contract services when supplied for construction of any immovable property except when it is an input service for further supply of works contract service. The only exception being when the works contract service is supplied for construction of plant and mac....
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....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 Air Conditioning & Cooling system & Ventilation system falls under the category of works contract service supplied for construction of an immovable property. We would also like to rely on the judgement of the Hon'ble Supreme Court in the case of Globus Stores P. Limited [2011 (267) ELT 435 (SC)] wherein it was held that air conditioning plant is an immovable property. 3. In the present appeals also, we are concerned with the air-conditioning plant which is the same good as that of Virdi Brothers (supra). The learned counsel appearing for the appellant, however, has drawn ....