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TMI Blog2019 (6) TMI 1580X X X X Extracts X X X X X X X X Extracts X X X X ..... fined under the GST Act. In laymen terms, any goods that can moved is a movable property and which cannot be moved is immovable property - 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 embedded for the permanent beneficial enjoyment of that to which it is attached, qualifies to be attached to the earth. Further, when any object is said to be embedded in earth, it does not mean that a part of it is to be inserted/ put deep beneath the earth by digging the earth for several meters. For laying any foundation especially in case of area of considerable dimension as in case of a warehouse, the top soil has to be removed, surface has to be leveled and some part of foundation stone always rests with in the earth. So this contention of the applicant that the support base of the warehouse made of PES neither attached to nor imbedded in the earth is rejected. Non-permanent nature of the PES structure - HELD THAT:- It has already been di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .8 One of the types of procurements made is that of the pre-engineered structure ( PES ). 1.9 As can be seen in the above images, a PES is a enclosure system that always includes a structural system and often includes roof and wall cladding. 1.10 The pre-engineered metal system is advantageous because it economically allows for the creation of large column-free enclosures. 1.11 The following are generally the primary components of a PES: a. Primary framing consisting of rigid frames, end wall frames, bracing and brackets; b. Secondary framing consisting of elements which support the roof and wall sheeting; c. Roof sheeting; and d. Wall cladding. It is with respect to ITC eligibility for these items that the Applicant seeks to obtain this ruling. The details of the question of law in Appendix 2 is accordingly submitted before this Hon ble Authority for Advance Ruling. 2. Questions: 2.1 Given the factual matrix as enunciated in Appendix 1 , we wish to seek a ruling on the following question: 2.2 Whether input GST credit can be availed by the Applicant on pre-engineered structures which is movable in nature and accounted as Plant and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven that the Applicant procures PES works which are erected in warehousing spaces rented out by the Applicant, the condition as provided under Section 16 for availment of ITC stands satisfied. II. Restriction provided under Section 17(5) (c) (d) does not apply to procurement of items for PESs: Credit restriction is only in so far as inputs/ input services for construction of an immovable property 3.10 Section 17(5)(d) uses the word for construction. 3.11 The term for is more specific than in relation to . The word for generally means for the purpose of . 3.12 The word for is defined in the Concise Oxford English Dictionary,8th Ed. as under: a) in the interest or to the benefit of; intended to go to; b) in defence, support or favour of; c) suitable or appropriate to; d) in respect of or with reference to; e) representing or in place of f) conducive or conductively to; in order to achieve 3.13 The Hon ble Supreme Court in the case of Mansukhlal Dhanraj Jain Ors. Etc. v. Eknath Vithal Ogale etc . = 1995 (2) TMI 439 - SUPREME COURT compared the words for and relating to and concluded that the lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to avail credit on such PESs as the same are used in the course or furtherance of Applicant s business. 4.3 It is pertinent to note that the restriction prescribed in Section17 (5) pertains to as inputs/ input services for construction of an immovable property . 5. Goods in question are movable: 5.1 The Applicant submits that anything embedded to the earth and which cannot be dismantled and moved, strictly are covered under the ambit of immovable property , thus restricting the same from availment of ITC as per Section 17 (5)(c) (d) of the CGST Act. 5.2 The term immovable property has not been defined under GST Act, therefore reference needs to be taken from General Clauses Act, 1897. 5.3 Section 3 (26) of the General Clauses Act, 1897, does not provide an exhaustive definition of the said expression. It reads : 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. 5.4 Similarly, Section 3 of the Transfer of Property Act, 1882 does not spell out an exhaustive definition of the expression immovable property . It simply provides that unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its weight Erection Easy, fast and efficient. Erection costs and time are accurately forecast based on extensive experience with similar buildings. Concrete construction takes more time to complete because it must be poured on site and allowed to cure before proceeding. Clear Spans Larger, up to 90 meters without interior columns. Smaller and the larger the span the heavier the structure. Building Height Higher Shorter It is nearly impossible to modify a concrete building to meet changing future needs. To expand the structure, the contractor must build a new structure with foundations, columns and most likely must break part of the old structure. Changes Flexible, tailor-made, changes and revisions can be made easily. Future expansion is simple, easy and cost-effective. One supplier to coordinate changes. Houses, Villas, and Parliaments Applications most beneficial to Industrial and Commercial. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is adopted to meet business requirements efficiently and effectively and hence it is in the course or in the furtherance of business. 8. Inapplicability of the decision of the West Bengal Authority for Advance Ruling in the case of Tewari Warehousing: 8.1 In the Advance Ruling issued by the authority for Advance Ruling, West Bengal, in the case of M/s. Tewari Warehousing Co Private Limited, the question was whether the applicant is eligible for input tax credit pertaining to construction of warehouse using pre-fabricated technology. 8.2 The Authority reasoned that if the article cannot be used without fastening or attaching it to the earth and is not removed under ordinary circumstances, it may be considered permanently fastened to anything attached to the earth. 8.3 Furthermore, in the context of the GST Act, if the article attached to the earth is not agreed to be severed before supply or under a contract for supply, it ceases to be goods and, for that matter, a moveable property. 8.4 The Authority opined that the pre-fabricated movable structures do not constitute the property of the warehouse. They are building blocks applied to a civil structure attached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant is eligible for input tax credit on goods services used in erection of infrastructure, which consists of steel tabular pole, galvanized iron wire, nuts , bolts, optical fibre cables, plastic pipes, clamps , for telecommunication service providers since the infrastructure provided by the applicant is different from Telecommunication Tower . 9.2 It was held that the infrastructure provided by the applicant is different from Telecommunication Tower and it is not an immovable property as it can be easily be moved to another place for use without any damage to the entire infrastructure. The infrastructure being a movable property can be classified as goods in terms of section 2(52) of CGST/SGST Act, 2017. The infrastructure provided being different from Telecommunication Tower, the applicant can avail Input Tax Credit on GST paid on the goods services in terms of section 16(1) of CGST/SGST Act, 2017, consumed while providing the supply in question. 9.3 As mentioned in the facts of the case, PES are movable in nature and thus applying the decision of the Advance Ruling Authority, the Applicant would be rightly eligible for Input Tax credit. 9.4 In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmissible under the CGST Act, 2017. 9.10 It was held that the goods in question are used or intended to be used in course of furtherance is business and as per section 16 of the GST Act Every registered person subject to such conditions and restrictions as may be prescribed would be entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in course or furtherance of business . 9.11 Further it is understood that credit with respect to various plant and machinery is admissible as per Section 16 of the CGST Act. 9.12 From the above, it can be inferred that the credit of input tax charged on the supply in the nature of various plant and machinery items are to be allowed as it is admissible under CGST/SGST Act 2017. 9.13 Thus, the Applicant submits that with reference to the explanation provided in section 17 (5) (d) of CGST Act, the goods in question i.e., PES which are in the nature of supporting civil works are movable fit-outs which would qualify as eligible input tax credit. 10. Discussion: 10.1 The applicant is engaged in building and managing industrial and warehousing spacing for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 10.7 Now, section 17 (5) (d) bars any taxpayer to avail the benefit of Input Tax Credit in case whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.11 Further, when any object is said to be imbedded in earth, it does not mean that a part of it is to be inserted/ put deep beneath the earth by digging the earth for several meters. For laying any foundation especially in case of area of considerable dimension as in case of a warehouse, the top soil has to be removed, surface has to be leveled and some part of foundation stone always rests with in the earth. So this contention of the applicant that the support base of the warehouse made of PES neither attached to nor imbedded in the earth is rejected. 10.12 As regards the issue of the non-permanent nature of the PES structure is concerned, it has already been discussed that the degree and nature of annexation is vital to the decision whether a property is a movable property or an immovable property. In the case of applicant, the warehouses are rented out to industrial consumers and manufacturers. These warehouses cover considerably large area and caters to the need of business which in terms requires permanence and stability. So, it cannot be said that the warehouses constructed/ erected by way of fixing pre-engineered structures is non-permanent in nature. 11. Ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X
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