9911796707
TMI Blog2023 (8) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... been carried out only for the purpose of preserving or maintaining an already existing factory building, which does not bring a new asset into existence. The Applicant is entitled to ITC on the goods and services received towards repair of existing factory buildings (which were already capitalized) to the extent of non-capitalization of expenses in their accounts. - SHRI R. GOPALSAMY, I.R.S., AND SMT. N. USHA, MEMBER 1. Any appeal against this Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Rulings, Chennai under Sub-section (1) of Section 100 of Central Goods and Service Tax Act / Tamil Nadu Goods and Service Tax Act 2017 ( the Act in short) within 30 days from the date on which the ruling sought to be appealed against is communicated. 2. In terms of Section 103(1) of the Act, this Advance ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. In terms of Section 103(2) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings to currently accepted standards and to sustain utility values of the facility. Repair works in the factory building are in the nature of painting, renovation, debris removal, roof changing etc., Repairs and maintenance expense is the cost incurred to ensure that an asset continues to operate. The Applicant has preferred this application as they have doubt on the issue of Input tax Credit (ITC) under GST. 2.3 The Applicant has stated that the activity is a works contract service for carrying out repair and maintenance work. Section 2(119) of CGST Act, 2017 defines works contract which means a contract for factory building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. 2.4 Section 17 of CGST/TNGST Act, 2017, debars certain activities/supplies/work from the eligibility to claim ITC. The relevant portion of sub-section 5 of Section 17 of CGST/TNGST Act, 2017 in this regard is reproduced below:- Notwithstanding anyth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for repair and maintenance of factory building is not related to the course or furtherance of business and also it is not plant and machinery under the category of capital goods; It is under the category of Blocked Credit under Section 17(5) (c) of the TNGST Act 2007. This section reads as works contract service when supplied for construction an immovable Property (other than plant and machinery) except where it is an input service for further supply of works contract service. Hence it is legally ineligible to claim input tax credit and utilizing it for the regular outward supply. 4.1 Personal hearing was conducted on 15.06.2022 through virtual mode as desired by the Applicant. The Authorised representative (AR), Shri V. Sundarajan Shri S. Kasi Viswanathan, appeared for the virtual hearing and reiterated the submissions already made by them. Shri. V. Sundarajan, emphasized that as per the explanation to Section 17(5) of the CGST Act, input tax credit on works contract service for construction is not eligible to the extent of capitalization only. Shri S.Kasiviswanathan of J.K. Fenner stated that maintenance of the factory has been undertaken which is accounted as revenue expenses an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk undertaken in the factory resulted in addition of area as compared to the existing built up area. He replied that in some instance the civil work resulted in increased built up area. He was also asked to furnish a write up on the civil work undertaken, the resultant additional of constructed area and treatment of cost of such additional area in the books of account. 4.5 For the above query, they have submitted the following documents; Note on Roof changed by M/s Albert Engineering Associates, Salem. Work Order PO No. 1791813 dt. 11.7.19, 1626846, dt. 16.9.19 1793539 dt. 5.12.19.- The above are roofing replacement work done by them on our existing Madurai-1 plant area. As mentioned in Purchase order, it consists of various roofing engineering work. This is done for the purpose of replacing very old asbestos roof sheets and for providing more ventilation and lighting inside the plant. This work does not result in addition of area as compared to the existing built up area and the question of treatment of costs of such additional area in the books of account does not arise. The cost of the referred work is charged to the revenue account (Profit and loss account). If civil work resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of business, as per the explanation, the expression construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. 5.5 Further, the explanation under section 17 is reproduced as below; Explanation: For the purpose 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. Hence, as per the above Explanation for the word construction provided under section 17, the Applicant has sought ruling, whether ITC is admissible on works contract services received towards factory building repairs to the extent of non-capitalization of such expenses. 5.6 In support of their contention they have furnished copies of purchase orders, work orders, sample document for accounting capital nature of civil expenses and sample document for revenue nature of civil expenses. Perusal of purchase order/work order revealed that the Applicant has procured certain goods and services towards renovation of factory buildings. But, there is no mention about the actual factory building or deterior ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
