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2021 (1) TMI 1015 - AAR - GSTMovable or Immovable property? - Temporary Structure (i.e. hall or pandal or shamiana or any other place) built up with Iron/Steel Pillars tight up with Nuts and Bolts (as shown picture enclosed) specially created for functions - Input Tax Credit - Iron/Steel Pillars tight up with Nuts and Bolt used for the creation of Temporary Structure (i.e. hall or pandal or shamiana or any other place) especially for functions - section 16 of the CGST Act, 2017 - CBEC through its Circular No. 58/1/2002-CX dated 15.01.2002 - HELD THAT - As per the definition of goods some movable property is excluded from the category of goods whereas at the same time, some immovable properties are treated as goods. But the terms movable and immovable property have not been defined under the GST Act. In laymen terms, any goods that can moved is a movable property and which cannot be moved is immovable property. The General Clauses Act 1897 and the Transfer of Property Act defines both these terms. Section 3 (26) of the General Clauses Act says 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 . Whereas, Section 3(36) defines movable property as property of every description, except immovable property . So as per this definition, any property which does not qualify to be immovable property, is a movable property. This definition of immovable property under the General Clauses Act is affirmative in nature as against the definition contained in the Transfer of the property Act 1882, which is negative in nature. As per TPA, immovable property does not include standing timber, growing crops or grass. It further says that attached to the 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. As per the definition of immovable property contained in the General Clauses Act and the Transfer of Property Act, it is clear that things attached to the earth or permanently fastened to anything attached to the earth is immovable property. Anything imbedded in the earth or attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached, qualifies to be attached to the earth. In the case of applicant, it is an admitted fact that the structure (shamiana, pandal or tent) constructed/ erected by the applicant is fixed to the foundation by nuts and bolts. But the applicant holds that this affixation of pillars and pre-fabricated shelter to the earth is not permanent. So, in essence, the question which needs to be dealt with by this Authority is whether this affixation of the structure with the earth or pillar imbedded in the earth is permanent or temporary - The THE COMMISSIONER TRADE TAX UP. LUCKNOW VERSUS TRIVENI NL. LTD. 2014 (4) TMI 842 - ALLAHABAD HIGH COURT has observed that permanently fastened to anything attached to the earth has to be read in the context for the reason that nothing can be fastened to the earth permanently so that it can never be removed. If the article cannot be used without fastening or attaching it to the earth and it is not removed under ordinary circumstances, it may be considered permanently fastened to anything attached to the earth. In this case, the applicant company is in the business of organizing wedding and other functions from its own premises at Ambience Golf Drive, Gurugram Haryana. Since, the premises where the structure has been erected is company's own premises, it suggests that the shamiana/ tent/pandal has been constructed/ erected for permanent enjoyment. It is not the case of applicant that it plans to dismantle and move the structure to some other place. The pictures attached with the application also depict that the civil work has been undertaken on a very large scale at the premises and this also indicates the permanent nature of the construction/ erected. Further, the concretionary base and the pillars used as platform and support to the structure is also of large dimensions and the platform or the structure cannot be put to beneficial use without the existence of the other. Merely because the walls and roofs have been replaced with pre-fabricated structure (an Engineering marvel), an immovable property cannot be categorized as movable property. Since, both the degree and nature of annexation/ attachment of the structure to the earth is strong and permanent, the structure in question is an immovable property. The applicant is not entitle to the credit of input tax in view of the provisions of Section 17(5)(d) of the CGST/ HGST Act, 2017.
Issues Involved:
1. Whether the temporary structure (i.e., hall or pandal or shamiana) built with iron/steel pillars tightened with nuts and bolts is treated as movable or immovable property under GST Law. 2. Whether the credit of the tax paid on iron/steel pillars used for the creation of the temporary structure is admissible under section 16 of the CGST Act, 2017. Issue 1: Movable or Immovable Property The applicant, engaged in organizing wedding and banquet functions, creates a temporary structure using iron and steel pillars, sheets, and other materials, tightened with nuts and bolts. The structure is not permanently affixed to the earth but is secured to provide stability and wobble-free operation. The applicant contends that such a structure is not immovable property, referring to definitions in the General Clauses Act, 1897, and the Transfer of Property Act, 1882, which distinguish between movable and immovable property based on permanence and attachment to the earth. The judgment references several Supreme Court cases, such as Triveni Engineering and Solid and Correct Engineering, which discuss the "permanency test" and the marketability of goods to determine their status as movable or immovable. The court in Solid and Correct Engineering concluded that if a machine is fixed by nuts and bolts for operational stability without the intention of permanent attachment, it does not become immovable property. Applying these principles, the judgment finds that the temporary structure created by the applicant does not constitute annexation and hence cannot be termed as immovable property. The structure is not intended to be permanent, can be moved after the function, and is only fixed to the foundation for stability. Issue 2: Admissibility of Input Tax Credit Section 16 of the CGST Act, 2017, provides eligibility for Input Tax Credit (ITC), while Section 17(5)(d) bars ITC for goods or services used in the construction of immovable property. The applicant argues that since the structure is not immovable, ITC should be admissible. The judgment, however, emphasizes the need to ascertain both the intention and the factum of fastening to determine if an article is permanently fastened to the earth. The applicant's structure is erected on its own premises, indicating permanent enjoyment, and the civil work undertaken suggests a permanent nature of construction. The structure's large dimensions and the interdependence of its components further support its classification as immovable property. Therefore, the judgment concludes that the structure is an immovable property for GST purposes, and the applicant is not entitled to ITC under Section 17(5)(d) of the CGST/HGST Act, 2017. Ruling: 1. The structure created by the applicant is an immovable property for the purposes of GST Law. 2. The applicant is not entitled to the credit of input tax in view of the provisions of Section 17(5)(d) of the CGST/ HGST Act, 2017.
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