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TMI Blog2020 (3) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... input tax credit. The appellant has argued that all the installations mentioned in his application qualify as Plant or Machinery . The items such as Chiller, Air Handling Unit, Indoor/Outdoor Surveillance System (CCTV), electrical wiring and fixtures, Public Health Engineering (PHE), Fire-fighting and water management pump system do not appear to be apparatus/equipment/machinery which are fixed to the earth. The appellant has also not submitted any information as to how these items are getting embedded to the earth since the criteria for terming such items as Plant and Machinery is that they have to be fixed to the earth either by foundation or structural support. In the absence of such information we hold that Chiller, Air Handling Unit, Indoor/Outdoor Surveillance System (CCTV), electrical wiring and fixtures, Public Health Engineering (PHE), Fire-fighting and water management pump system do not qualify as plant or machinery but are items which are procured for the purpose of construction of the immovable property. Hence, the appellant is not eligible for the input tax credit of the tax paid on the procurement and installation of Chiller, Air Handling Unit, Indoor/Outdoor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake development of the said property, the appellant is required to procure numerous goods and avail numerous services including works contract service from many suppliers. Accordingly, the appellant placed purchase orders on various suppliers for goods and work order on various suppliers for services and the suppliers have raised invoices on the appellant. 5. Amongst other goods and services, the appellant has procured goods and / or services for the installation of Chillers, Air Handling Unit (AHU), Lift, Escalator, Travellator, Water Treatment Plant (WTP), Sewage Treatment Plant (STP), High-speed Diesel yard (HSD) Mechanical Car Park and Indoor/Outdoor Surveillance System (CCTV), DG sets, Transformers, Electrical wiring and fixture, Public Health Engineering (PHE), Fire-fighting and water-management pump system. Supply of all the aforesaid goods and services are taxable supplies under the GST Acts and, accordingly, tax has been charged by such suppliers and paid by the appellant to such suppliers. A brief description of the nature of these installations is given below: i. Chiller - It is air-conditioning equipment that generates chilled water, essential for overall tempe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The appellant sought advance ruling in respect of the following question: Whether taxes paid on procurement of goods and/or services for installation of the following, are regarded as blocked credits under Section 17(5) of the CGST Act, 2017? (a) Chillers, (b) Air Handling Unit (AHU), (c) Lift, Escalators and Travellator, (d) Water Treatment Plant (WPP), (e) Sewage Treatment Plant (STP), (f) High Speed Diesel Yard (HSD), (g) Mechanical Car Park (MLCP), (h) Indoor / Outdoor Surveillance System (CCTV), (i) D.G. Sets, (j) Transformers, (k) EIectricaI wiring and fixtures (I) Public Health Engineering (PHE), Fire-fighting and water management pump system. 7. The Authority for Advance Ruling vide order No KAR ADRG 103/2019 dated 30th Sept 2019 = 2019 (10) TMI 1021 - AUTHORITY FOR ADVANCE RULING, KARNATAKA held that the taxes paid on procurement of goods and/or services for installation of the Installations as listed in the application are regarded as blocked credits under Section 17(5) of the CGST Act, 2017 . 8. Aggrieved by the said ruling, the appellant has filed this appeal on the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 639 AP = 1988 (6) TMI 23 - ANDHRA PRADESH HIGH COURT f) Sirpur Paper Mills Ltd vs CCE, Hyderabad - 1998 (97) ELT 3 (SC) = 1997 (12) TMI 109 - SUPREME COURT 8.5. The appellant also relied on the analogy of certain judicial pronouncements rendered under the erstwhile Cenvat Credit laws, wherein it has been held that Cenvat credit of inputs/input services used for construction is admissible. a) M/s. Rattha Holding Co Pvt Ltd vs Commissioner of Service Tax, Chennai - 2018 (9) TMI 1722 b) Commissioner of Central Excise, Vishakapatnam-II vs M/s. Sai Samhmita Storages (P) Ltd- 2011 (2) TMI 400 c) Commissioner of central Excise, Salem vs Ashok Agencies - 2016 (5) TMI 782 8.6. The appellant submitted that parts, components, accessories come into existence before the installation of the machinery and credit of taxes paid on the same cannot be denied even if they become part of the immovable property after installation of the plant and machinery. They relied on the following judicial pronouncements in support of this stand: a) Commissioner of Central Excise Service Tax vs India Cements Ltd 2014 (310) ELT 636 (Mad) = 2014 (7) TMI 881 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter VI of the CGST Act PERSONAL HEARING 9. The appellant was called for a personal hearing on Jan 2020 but the same was postponed to 31 st Jan 2020 on their request. The appellant was represented by Shri. Badrinath N.R, Chartered Accountant who reiterated the submissions made in the grounds of appeal. He stressed on the submission that the term Plant is to be looked at independently and not in conjunction with machinery . He submitted that when the building is rented out, the tenant is given the right to use the installations which are part of the common facilities provided. For use of the common facilities, separate common area maintenance charges are collected from the tenants which is separate from the rental charge. On a specific query by the Members, the appellant submitted photographs of the water treatment plant and sewage treatment plant installed at the Arena Mall. DISCUSSIONS AND FINDINGS 10. We have gone through the records of the case and considered the submissions made by the Appellant in their grounds of appeal as well as at the time of personal hearing. It is seen from the records and the submissions made by the appellant that they are constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in respect of the following, namely: - . . . . . . .. (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: For the purposes of clauses (c) and (d), the expression construction includes reconstruction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. 14. It is seen from the above that input tax credit in general is not available for construction, reconstruction, renovation, addition, alteration or repair of an immovable property even when such goods or services or both are used in the course or furtherance of business. The exception to the restriction contained in Section 17(5)(d) is regarding Plant or Machinery. In other words, the tax paid on the procurement of goods or services for construction of Plant or Machinery would not be hit by the provisions of Section 17(5)(d) of the CGST Act. The words Plant and Machinery have not been defined separately under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 17(5) of the CGST Act can be read as and since it appears to give effect to the intention of the legislature to allow input tax credit on the construction of plant and / or machinery. Therefore, we are of the view that this argument of the appellant is not of much relevance. We will not labour over the case laws cited by the Appellant on this issue, as we do not rely upon those submissions of the Appellant. 17. Having said thus, we find that the restriction contained in Section 17(5)(d) is applicable to goods and services received by a taxable person for construction of an immovable property. When goods and services are received by a taxable person for construction of plant or machinery, there is no bar on eligibility to input tax credit. The appellant has argued that all the installations mentioned in his application qualify as Plant or Machinery . The Explanation to Section 17 defines Plant and machinery to mean apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes (i) land, building or any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice lifts, escalator and travellator at the project site. No doubt lifts, escalator and travellators are fixed to the earth with structural supports and they qualify as plant and machinery. However, it appears that the supply of the lifts and its installation at the project site of the appellant are done by the vendor M/s OTIS. In such a case, M/s OTIS will not be hit by the restriction imposed under Section 17(5)(d) since they are engaged in the construction of lift, escalator, travellator which qualifies as plant and machinery. However, the appellant will not be eligible for the credit of the tax paid on such procurements since the appellant is not doing the installation of the lifts, escalators and travellators. 21. Similarly, in the case of the invoice issued by Wohr Parking Systems Pvt Ltd, it is seen that the vendor has raised an invoice on the appellant for the supply of I car parking system Combilift 551 for a value of ₹ 2.69 cr. It is also stated in the said invoice that the supporting steel structure is in Wohr s scope. This evidences the fact that the complete supply and installation of the car parking system is done by the vendor. The car parking system bei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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