2020 (7) TMI 477 - AAR - GST

Input Tax Credit - Blocked Credits - Purchase of Water Slides - Water Slides are made up of Strong PVC - Water Slides are installed on Steel and Civil Structure - Input goods and services used in construction of the support structure - Goods and services used for area development and preparation of land on which water slides are erected - Goods and Services used for construction of Swimming Pool / Wave Pool as water slides directly run into pools. HELD THAT - To set to rest the disputes regarding the definition of the Plant, in light of the fact that input tax credit of works contract services, goods and services received as input for construction of immovable property on own account has been specifically put under the Blocked Credit list with the rider that it shall not apply to plant and machinery, it was incumbent that there should be clarity regarding classification of buildings and civil structures that were hitherto been classified as Plant - in the explanation relating to Plant and Machinery, beneath sub-section (6) of Section 17. while providing the meaning of the term plant and machinery, it has been clearly stated that Buildings and Civil Structures shall not be covered under the term Plant. However, while so clarifying, it has been accepted and understood that plant and machinery many a times requires support structure and / or foundation for installation and cannot work otherwise. Thus, civil structures and foundation as supporting structure for fastening of plant and machinery to earth has been included as part of plant and machinery. Eligibility of ITC in case of Input Tax paid on Purchase of Water Slides - HELD THAT - Water Slides shall fall within the meaning of the term apparatus, equipment and machinery and therefore, shall be eligible for claim of ITC. ITC on Steel and Civil Structure on which the Water Slides are installed - HELD THAT - The foundation and support structures which are used to fasten plant and / or machinery to the Earth is classifiable as Plant and / or Machinery - In the instant case. slide are fastened to the Steel and Civil Structure are affixed to the Earth through these Steel an Civil Structures. Therefore, these Steel and Civil Structures shall form part of the Plant and Machinery. Accordingly. the credit of Tax paid on Input goods and services used in construction of this support structure shall be available. ITC - For Wave Pool, Machines have been installed - HELD THAT - The foundation for these machines are eligible to be part of the Machines and the ITC shall be treated in a manner similar to that of the Machines. However, the Machine Room, which is a civil structure, erected for protecting machine is neither foundation nor civil structure for machine therefore, IT relatable to the construction of the room for Housing the machine shall not be eligible for ITC. ITC on Goods and services used for area development and preparation of land on which water slides are placed - HELD THAT - The area development and expenditure on preparation of land like site formation services are part of the cost of the land and thus are interminably bound with land. These expenses are liable to be capitalized under the head Land. Therefore, on account of the specific exclusion of Land from the meaning of plant and machinery . ITC related to Land Development, subject to its capitalization as per accounting principles shall not be available. ITC on Construction of swimming pools / Wave Pool in which the water slides directly run into - HELD THAT - Such Swimming Pools / Wave Pools are not support structure or foundation for a plant, but are independent items per se. Since they are not foundation or support structure on which slides are fasted for affixing them to earth and also on account they being Civil Structures. they are therefore excluded from the meaning of plant and machinery . Thus, the ITC related to the construction of the Swimming Pools and Wave Pools. subject to its capitalization shall not be available. ITC on Inward supplies of goods or services involved in the construction of immovable properly which is a civil structure or building - HELD THAT - The provision of facilities like transformers. sewage treatment plant. Electrical Wiring and Fixtures. Surveillance systems. D.G. Sets. Lilts. Air Handling Units etc. are sine qua non for a commercial mall and hence cannot he considered separate from the building or civil structure. The provision of these are either statutory for a building or defines the nature of the building as a commercial mall. Hence the input tax credit on the inward supplies of goods or services involved in the construction of immovable properly which is a civil structure or building is not available to the applicant and hence blocked.

Summary

Issues Involved:
1. Eligibility to take credit on Input Tax paid on the purchase of Water Slides.
2. Availability of credit of tax paid on input goods and services used in the construction of support structures for Water Slides.
3. Availability of Input Tax credit on goods and services used for area development and preparation of land for Water Slides.
4. Eligibility to take credit of input goods and services used for the construction of Swimming Pool/Wave Pool.

Detailed Analysis:

1. Eligibility to Take Credit on Input Tax Paid on Purchase of Water Slides:
The judgment states that Water Slides, being apparatus, equipment, and machinery, fall within the meaning of plant and machinery as defined under the GST Act. Therefore, the applicant is eligible to claim Input Tax Credit (ITC) on the purchase of Water Slides.

2. Credit of Tax Paid on Input Goods and Services Used in Construction of Support Structures:
The judgment clarifies that the foundation and support structures used to fasten plant and machinery to the earth are classified as 'Plant and Machinery'. Since the Water Slides are fastened to the steel and civil structures which are affixed to the earth, these structures form part of the plant and machinery. Thus, the credit of tax paid on input goods and services used in the construction of these support structures is available to the applicant.

3. Input Tax Credit on Goods and Services Used for Area Development and Preparation of Land:
The judgment highlights that area development and preparation of land, such as site formation services, are part of the cost of the land. These expenses are capitalized under the head 'Land' and are excluded from the definition of 'plant and machinery'. Therefore, ITC related to land development, subject to its capitalization as per accounting principles, is not available.

4. Eligibility to Take Credit of Input Goods and Services Used for Construction of Swimming Pool/Wave Pool:
The judgment states that Swimming Pools/Wave Pools are not support structures or foundations for a plant but are independent items. Since they are civil structures and are not used to fasten the slides to the earth, they are excluded from the definition of 'plant and machinery'. Consequently, ITC related to the construction of Swimming Pools and Wave Pools, subject to its capitalization, is not available.

Additional Findings:
- The judgment also discusses the provision of facilities like transformers, sewage treatment plants, electrical wiring and fixtures, surveillance systems, D.G. sets, lifts, and air handling units. These facilities are essential for a commercial mall and are considered part of the building or civil structure. Therefore, the input tax credit on the inward supplies of goods or services involved in the construction of immovable property, which is a civil structure or building, is not available and hence blocked.

Conclusion:
The ruling is valid subject to the provisions under section 103(2) until declared void under Section 104(1) of the GST Act. The judgment provides a comprehensive analysis of the eligibility of ITC on various components and services used in the construction of a Water Park, with specific exclusions based on the definitions provided under the GST Act.