2019 (10) TMI 1018 - AAR - GST

Input GST credit - detachable 14mm Engineered Wood with Oak top Wooden Flooring which is movable in nature and capitalized as furniture and fixture , and is not capitalized as immovable property - HELD THAT - The input tax credit of GST can be availed by the applicant on the detachable 14 mm Engineered wood with Oak top wooden flooring which is movable in nature and capitalized as furniture . Input GST Credit - detachable sliding and stacking glass partition which is movable in nature and capitalized as furniture and fixture , and is not capitalizes as an immovable property - HELD THAT - The input tax credit of GST is not available on the detachable sliding and stacking glass partitions.

Summary

Issues Involved:

1. Eligibility of Input GST Credit on Detachable 14mm Engineered Wood with Oak Top Wooden Flooring.
2. Eligibility of Input GST Credit on Detachable Sliding and Stacking Glass Partitions.

Detailed Analysis:

1. Eligibility of Input GST Credit on Detachable 14mm Engineered Wood with Oak Top Wooden Flooring:

The applicant, involved in providing shared workspaces, sought an advance ruling to determine if they could avail Input GST Credit on detachable 14mm Engineered Wood with Oak Top Wooden Flooring, which is movable and capitalized as "furniture and fixture."

- Section 16 of the CGST Act: The applicant argued that under Section 16, they are entitled to take credit of input tax charged on supplies used in the course or furtherance of business. Since the flooring is used in rented office spaces, the condition for availment of ITC is satisfied.

- Section 17(5)(d) of the CGST Act: The applicant contended that the restriction under Section 17(5)(d) does not apply as the flooring is not used for the construction of immovable property. The flooring is movable, not inextricably linked to the building, and capitalized as "furniture and fixture," not as immovable property.

- Nature of Flooring: The detachable flooring is installed using a foam and can be easily removed and reused without damaging the building or the flooring itself, indicating it is not a permanent addition to the immovable property.

- Judicial Precedents: The applicant cited various rulings and judgments supporting the view that movable items used in the course of business qualify for ITC. For instance, the Uttarakhand AAR in M/s. VINDHYA TELELINKS LTD held that movable infrastructure qualifies for ITC.

Ruling: The Authority ruled that the input tax credit of GST can be availed on the detachable 14mm Engineered Wood with Oak Top Wooden Flooring as it is movable and capitalized as "furniture."

2. Eligibility of Input GST Credit on Detachable Sliding and Stacking Glass Partitions:

The applicant also sought an advance ruling on whether they could avail Input GST Credit on detachable sliding and stacking glass partitions, which are movable and capitalized as "furniture and fixture."

- Section 16 of the CGST Act: Similar to the flooring, the applicant argued that the glass partitions are used in the course or furtherance of business, thus qualifying for ITC under Section 16.

- Section 17(5)(d) of the CGST Act: The applicant claimed that the restriction under Section 17(5)(d) does not apply as the partitions are capitalized as "furniture and fixture" and not as immovable property. They provided a chartered accountant certificate to support this classification.

- Nature of Partitions: The partitions are fixed using nuts and bolts and can be dismantled and reused, indicating they are not permanently attached to the building.

Findings & Discussion:

- Immovable Property Definition: The Authority noted that the partitions, though detachable, are fixed to the building to create office spaces, providing a certain degree of permanence. They are essential for demarcating office spaces and are permanently fastened to the building, thus qualifying as additions to immovable property.

- Application of Section 17(5)(d): Since the partitions are used for constructing an immovable property, the input tax credit on them is restricted under Section 17(5)(d).

Ruling: The Authority ruled that the input tax credit of GST is not available on the detachable sliding and stacking glass partitions as they are considered additions to immovable property.

Conclusion:

- Detachable 14mm Engineered Wood with Oak Top Wooden Flooring: Eligible for Input GST Credit as it is movable and capitalized as "furniture."
- Detachable Sliding and Stacking Glass Partitions: Not eligible for Input GST Credit as they are considered additions to immovable property.