TaxTMI 
TaxTMI 
2024 (9) TMI 298
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....issible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103 (1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only,- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of bo....
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....ng service is naturally dependent on the various allied services which are essential for enhancement of the quality of output service; (iii) That this would result in increased contribution to the exchequer, in the form of taxes payable on (i) the enhanced rent receivable from the tenants, and (ii) from the consideration receivable separately towards the parking services provided to the customers of the tenants; that especially under the second category, the provision of service is solely dependent on the Rotary parking system and installation thereof; (iv) That all the eligibility and conditions for taking ITC on the goods/services as laid down in Section 16 of the CGST/TNGST Act, 2017, have been complied with, and that it is not the case of the Department that there was no compliance of legal provisions in the instant case by the appellant; they are therefore entitled to avail the ITC on the composite activity of supply of Rotary Car Parking system and the installation thereof, which are intended for furtherance of business (Renting of Immovable Property), for which registration has been obtained; (v) The AAR has observed that after installation only, i....
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....ded in the context of considering a particular item as excisable goods, would throw the guiding light on the subject matter covered in the instant case; (xii) That there can be no legal sanctity for the observations of the AAR to the effect that the car parking system falls within the meaning of Section 3 (26) of the General Clauses Act, 1897 (permanently fastened to anything attached to earth) and Section 3 (c) of the Transfer of Property Act, 1882 (attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached), by placing reliance on the decision of the Hon'ble High Court of Allahabad, in the Tax Revision case No.910/2001, in respect of the Commissioner Trade Tax U.P. Lucknow Vs S/S Triveni N.L. Ltd.,; (xiii) That the observations of the AAR that rotary parking has been built in the own land of the applicant, with a view to retain the existing tenants and to have full occupancy rate, cannot prevent the appellant to sell or transfer to another place, or upgrade the system; Likewise, the observation of AAR that it is not the case of the applicant to dismantle and move the structure to some other place, and that the intention i....
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....er works contract service.; that the inference from the exclusion part is the ITC cannot be blocked on such foundation and structural supports for placing the Apparatus or Equipment or Machinery, that the parking system cannot fall within the scope of civil structures, and that there is no availment of ITC on that part of the civil structure, as the same is covered under the customer scope of work.; (xviii) That with regard to the AAR's observations on the definitions of the terms like Civil Structure, Structure, Building, Foundation, etc., the appellant stated the following points, i.e., • Car parking is covered under the category of Apparatus, Equipment and Machinery • The foundation and structural support is altogether different from the parking system and that the same are intended only for providing safety and stability of the parking system. • The primary object is to handle and move vehicles from one place to another, and therefore it falls under the category of plant and machinery. • The civil foundation work is required to be carried out by the customer as per the foundation drawings provided by the supplier, and....
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....es, 2019, (as referred by the AAR), came into force on 04.02.2019, which may not have applicability in respect of the buildings constructed prior to that.; that in any case, the observations of AAR on this aspect may not have relevance for the impugned issue; (xxi)That the observations of AAR in considering the constituent parts/components to be analogous to that of building blocks utilized in the construction of multi-storeyed conventional car parking seems to be subjective in nature and without legal sanctify, as it cannot be equated to a civil structure. (xxii) That without prejudice to any of the arguments advanced, the inordinate delay of 238 days in pronouncing the original ruling by the AAR, amounts to denial of justice. PERSONAL HEARING: 4.1 Shri A. Senthil Maharaj, Proprietor and Shri K. Rajendran, Consultant and the authorized representative (AR) of M/s. Arthanarisamy Senthil Maharaj, appeared for the Personal Hearing on 16.07.2024. The AR reiterated the submissions made by them in the 'Grounds of Appeal' filed along with the application. The AR stated that the appellant renders 'Renting of Immovable Property Service' of the premises owned by him. ....
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....lauses (c) and (d) of Section 17 (5) of the Act, clearly excludes 'Plant and Machinery' from its ambit, ITC on the same is eligible to be availed by the appellant even if it is fixed to earth by foundation or structural support, as provided for in the said definition. 4.6 As undertaken, the AR through their e-mail dated 17.07.2024 furnished the following documents, which are taken on record, viz., (i) The Brochure in respect of the Parking system manufactured by M/s. Parklayer. (ii) Drawing in respect of the Foundation work. On perusal of the documents furnished, it is seen that under the brochure, various types of parking systems, provided by the supplier (M/s. Park Layer), viz., Rotary Parking, Tower Parking, Pit Puzzle G+l-1, Puzzle Parking G+1, Puzzle Parking G-l, Stack Parking and Turn table Parking, alongwith the respective technical specifications are provided. In respect of the Rotary Parking', specifications relating to parking capacity, system dimensions, Gear Motor, Speed, Motor control, Electrical Power Source, Safety devices, 'etc., have been provided. Perusal of the design/drawing of the Foundation work to be carried out prior to installation o....
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...., and that the same amounts only to a composite supply. • That the parking facility is installed at the premises of the applicant and not in the building. • That they have brought out a comparative study between a lift and a parking facility in their submission so that the difference could be appreciated in relation to the ITC eligibility. 5.4 From the above, we observe that the appellant renders Renting of Immovable Property Service' of the commercial premises owned by him, and that the appellant is proposing to install a 'Rotary Car Parking System', within the premises owned by him, but not within the building. We also observe that the provisioning of parking facility is for the tenants of the commercial building as well as the customers of those tenants. 5.5 To begin with, the relevant provisions of Section 17 (5) of the CGST Act, 2017 that impacts the issue in the instant case, is reproduced below for facilitation, - "(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;- (a) motor vehicles-------- ....
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.... Machinery fixed to earth by foundation or structural support Mechanical contrivances which, by themselves or in combination with other mechanical contrivances, by the combined and inter dependent operation of their respective parts generate power, or evoke, modify, apply, or direct natural forces with the object in each case or effecting a definite and specific result. Accordingly, the appellant has inferred that by virtue of the inclusion clause involving foundation and structural supports, ITC is admissible on the construction of this activity for placing the Apparatus or Equipment or Machinery, and that the ITC is not blocked even if the said activity falls under Works Contract Service. While taking up the three items referred above for discussion relating to the rotary parking system, we observe that an 'equipment' is to be effectively ruled out, as it refers to just articles or implements for a specific purpose of activity. Likewise, the term 'Machinery' refers to just a mechanical device or a gadget aimed at achieving a definite or specific result. An 'Apparatus' of course talks about 'a machine or device consisting affixed or movable parts that work together to perf....
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....vable Property'. In terms of Section 3 (26) of the General Clauses Act, 1897, the expression 'immovable property' shall include land, benefits arising out of land and things attached to the earth or permanently fastened to anything attached to the earth. Further, 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. 5.10 Normally, when an immovable property is leased/rented out, especially in a commercial/residential complex, the aspect of 'common area' for general use by the tenants, gets attached to it by default. As per the Wikipedia website', a common area is the "area which is available for use by more than one person. The common areas are those that are available for common use by all tenants, (or) groups of tenants and their invitees." And, more specifically, as per Section 2(n) of the Real Estate (Regulation and Development) Act, 2016 (RERA), (n) "common areas" mean....
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...., viz., 'Renting of Immovable Property'. 5.12 We further observe that the overall process relating to commissioning of the rotary parking system, involves three major activities to be carried out, viz., (i) Supply of all the materials required for installation of the parking system. (ii) Foundation work to support the entire structure to be installed. (iii) Installation of the parking system at the site of the customer. 5.13 On perusal of the relevant invoices as available on file of M/s. Park Layer, who reportedly undertake supply and installation of the rotary parking system, it is seen that the car parking system is not supplied as such as a whole, and the constituent parts of the Car parking system, viz., Gauge Plate, Bolts, Hex nuts, Frame Assembly, and Pallet with Electricals have been supplied in three lots under three invoices dated 19.09.2023, 12.12.2023 and 15.12.2023. Perusal of the quotation dated 09.05.2023 reveals that the quotation is for 'supply, installation, testing and commissioning of Rotary Parking - SM18XL system'. The quotation also specifies the 'Customer Scope of Work' which involves completing the civil foundation and struc....
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.... that is being rented out, also becomes an 'immovable property' in its own right. Further, under normal circumstances, the expenses relating to the procurement and installations of such magnitude are required to be capitalised in the books of accounts of the taxpayer. Accordingly, we are of the opinion that the entire rotary parking system with all the specialised foundation, structural support and installation works, becomes an immovable property of the appellant, as it attains the status of an 'immovable property' on construction and commissioning of the same. 5.15 The appellant has contended that the AAR had erred in equating the installation of Petrol tank as discussed in the case of Hon'ble Supreme Court of India involving Indian Oil Corporation and Municipal Corporation of Greater Bombay, to that of the Car Parking system, as the parameters for installation of petrol tank are entirely different and the attempt to draw parallel between the two contrast situations would be a futile exercise. On perusal of the ruling of the AAR, we come to know that the AAR had actually attempted to apply the 'permanency test', discussed therein which is crucial to the instant case. According....
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.... complex for whom the premises along with facilities are rented out. Accordingly, the claim of the appellant that they may sell or transfer the same at a later date, and that the system is capable of being assembled, dissembled and re-assembled any number of times, cannot alter the basic purpose for which it is installed/created. 5.17 Likewise, we find that the installation of parking facility is now a requirement for high rise buildings in terms of the Tamil Nadu Combined Development and Building Rules, 2019, wherein under Rule 39 (5), it has been stated as follows:- "(5) Parking and Parking facilities.- For the use of the occupants and of persons visiting the premises for the purposes of profession, trade, business, recreation or any other activity parking spaces and parking facilities shall be provided within the site to the satisfaction of the competent authority and conforming to standards prescribed in the Annexure-IV." Further, specific provisions have been provided for automated/ mechanically operated parking under Part-Ill of Annexure-IV as referred above, which reads as, "For automated/mechanically operated parking, the Executive authority notwiths....
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....erson for construction of an immovable property------rather than 17 (5) (c) which begins with the phrase "works contract services when supplied for construction of an immovable property -". 5.19 The appellant has contended that the installation of car parking system is for furtherance of business, as the provisioning of renting service is naturally dependent on the various allied services which arc essential for enhancement of the quality of output service. It is reiterated here that' once it is held that the receipt of goods and service by the appellant in the instant case is towards construction of an immovable property, the availment of ITC on the same is blocked under 17 (5) (d) of the CGST Act, 2017, even if it is used in the course or furtherance of business. 5.20 The appellant has further claimed that this would result in increased contribution to the exchequer, in the form of taxes payable on (i) the enhanced rent receivable from the tenants, and (ii) from the consideration receivable separately towards the parking services provided to the customers of the tenants; that especially under the second category, the provision of service is solely dependent on the Rotary pa....
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....g or is installed within the premises (common area) of the taxpayer who is rendering Renting of Immovable Property service', as discussed in detail in paras 5.10 and 5.11 above. Apart from the above, it is brought to notice that the above mentioned ruling of the Authority for Advance Ruling, Madhya Pradesh, has since been upheld by the Appellate Authority for Advance Ruling, Madhya Pradesh vide Order No. MP/AAAR/04/2020 dated 23.10.2020, by holding that the ITC is not admissible on purchase of Lift as per Section 17 (5) (d) of the CGST Act, 2017. Further, it is seen to be discussed in para 5 of the above referred order that, the lift so installed was not a customized lift but a predesigned one which could be installed by fastening nuts, bolts and other fasteners in the building, and that the lifts can be disassembled without causing any structural damage to the building and reassembled on need and can be resold in open market. As the dynamics of this case appear to be more or less similar to 'rotary parking system' in the instant case, we are of the opinion that the ratio of the said decision applies squarely to the instant case. 5.22 The appellant has stated that without prejud....