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TMI Blog2023 (10) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... description of the works contract service. The lift would become an immovable property after being erected and installed, as it is attached to the building itself - As the erection, installation and commissioning of lift via a works contract service as pointed out above, makes it an immovable property, it ceases to be a plant and machinery. Thus, in terms of section 17 of the CGST Act, the appellant is not entitled to ITC of GST paid on supply of Lift/Elevator. Electrical fittings such as Cables, Switches, NCB and other Electrical consumables materials - HELD THAT:- The electrical fittings are mostly concealed into the wall/floor of the building. They are concealed or fitted on to the building through pipes as it serves the dual purpose of safety and aesthetics. The supply of electrical fittings involves its installation also, The supply therefore falls under the category of Works Contract Service , further on installation of the electrical fittings it becomes part of the building and thereby an immovable property - the supply of electrical fittings after installation and commissioning becomes part of the building i.e. immovable property and thus in terms of section 17 of the CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act, 2017 and the GGST Act, 2017 ) are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the GGST Act, 2017. 2. The present appeal has been filed under Section 100 of the CGST Act, 2017 and the GGST Act, 2017 by M/s The Varachha Co-op. Bank Ltd., against the Advance Ruling No. GUJ/GAAR/R/37/2021 dated 30.07.2021. 3. Briefly the facts are enumerated below for ease of understanding. 4. M/s. The Varachha Co-Op. Bank Ltd., I to 10, Affil Tower, L.H. Road, Surat-395006, Gujrat (hereinafter referred to as the appellant ), holding GSTIN: 24AABAT4356N1Z6, submitted that they are constructing a new administrative building and incurring cost on various services. The appellant, further submitted that they were eligible for Input Tax Credit [ITC] on the below mentioned goods and services in view of the foregoing viz: Sr. No. Nature of Cost/ Expenses Head under which expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Extinguishers, Roof Solar Plant; iii) Input Tax Credit is blocked under Section 17(5)(d) CGST Act for Architect Service and Interior Decorator Fees. 7. Feeling aggrieved with the ruling in respect of (ii) (iii) supra, the appellant has preferred the present appeal raising the following plea: a) GAAR has erred in interpreting section 17(5) of the CGST Act, 2017 whereby the ITC which was otherwise eligible to the appellant, is denied. The appellant submitted reasons and justification for each item on which ITC was claimed as follows: Central Air Conditioning System The appellant had entered into a contract for supply erection of Central Air Conditioning System . Section 2(119) of the CGST Act, defines Works Contract . The expression works contract is limited to contracts to do with immovable property, which is defined in clause 3(26) of the General Clauses Act, 1897. Section 3 of the Transfer of Property Act 1882, further defines the phrase attached to earth . The supply received by the appellant does not involve assimilation with the property and the work carried out by the supplier is only to make the plant ready for a wobble free operation . Thus, the activity undertaken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises of the appellant is an immovable property. Fire Safely Extinguishers Fire Safety Extinguishers is nothing but Plant and Machinery attached to earth which is movable as well as marketable also. They further also relied on the case of M/s. Sirpur Paper Mills, supra, further, as per the Gujarat Fire Prevention and Life Safety Measures Act, 2013. the appellant is duty bound to install fire safety instruments/system at their premises, Further credit restriction is only in so far as inputs/input services for construction of an immovable property is concerned and does not apply to capital goods. The restriction provided under section 17(5)(c) (d) does not apply to procurement of various inputs which are installed in their administrative building. Hence. ITC should be available to the appellant on these goods. Architect Service Fees The appellant appointed architect i.e. Mr. Jignesh Moradiya and M/s. Keystone Consultants, for structural design of building. The explanation under section 17(5) defines the expression construction . In the instant case . the said expenses is not capitalized and is charged to Profit Loss Account and hence ITC is admissible. Interior Designing Fees The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal against the order of GAAR rejecting ITC on the aforementioned items, wherein ITC stands blocked/disallowed. 12. The provisions of ITC and blocked credit provided under sections 16 17 of the CGST Act, 2017, states as under: (relevant extracts) Section 16. Eligibility and conditions for taking input tax credit.- (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, he entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. Section 17. Apportionment of credit and blocked credits (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embedded to earth, as in the case of walls or buildings and (c) attached to what is so embedded for permanent beneficial enjoyment of that to which it is attached. Thus, on a conjoint reading immovable property , essentially means something which is attached to the earth, or permanently fastened to anything attached to the earth, or forming part of the land and not agreed to be severed before supply or under a contract of supply. 14. We now move on to examine the seven disputed supplies for which this appeal is preferred. 15. Central Air Conditioning Plant 15.1 The appellant states that they had entered into a contract for supply erection of Central Air Conditioning System . Relying on section 2(119) of the CGST Act, which defines a Works Contract , the appellant states that works contract is limited to immovable property; that the supply does not involve assimilation with the property; that the work carried out by the supplier is to make the plant wobble free for operation and hence it cannot be considered as an Immovable Property by applying the permanency test. 15.2 A conjoint reading of sections 16(1) and 17(5)(c), ibid, shows that ITC can be availed by a registered person sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws: 5 (iii) Refrigeration/Air conditioning plants. These are basically systems comprising of compressors, ducting, pipings, insulators and sometimes cooling towers etc They are in the nature of systems and are not machines as a whole. They come into existence only by assembly and connection of various components and parts. Though each component is dutiable, the refrigeration/air conditioning system as a whole cannot be considered to be excisable goods. Air conditioning units, however, would continue to remain dutiable as per the Central Excise Tariff. Taking inference from the above Board s circular we find that the supply of Central Air Conditioning Plant falls under the category of works contract service supplied for construction of an immovable properly. We would also like to rely on the judgement of the Hon ble Supreme Court in the case of Globus Stores P. Ltd., [2011 (267) ELT 435 (S.C.)] wherein it was held that air-conditioning plant is an immovable property. 3. In the present appeals also, we are concerned with the air-conditioning plant which is the same good as that of Virdi Brothers (supra). The learned counsel appearing for the appellant, however, has drawn our attentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement for supply of lift, we find that the same falls under the category of works contract service as defined under section 2(119) of CGST Act, 2017, as it fulfills the description of the works contract service. 16.2 We find that in the case of M/s. Otis Elevator Company (India)[2003 (151) ELT 499] the Hon ble Bombay High Court, held that lift/elevator is an integral part of immovable property, viz. [relevant extract]: 9. Having heard the rival contentions and having examined all the citations referred to hereinabove, we are clearly of the opinion that the same shall apply to the facts of this case in full force and item in question being immovable property cannot be subjected to excise under the tariff heading claimed by the Revenue. The case sought to be made out by the petitioner is also covered by the decision of the Government of India in reference, Otis Elevator Company (India) Ltd. 1981 (3) E.L.T. 720 (GOI), wherein it was clearly held that if an article does not come into existence until it is fully erected or installed, adjusted, tested and commissioned in a building, and on complete erection and installation of such article when it becomes part of immovable property,. [e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerated is to be used in-house only in case the available energy exceeds the demand, it would be exported to the DGVCL grid via Net Metering System; that it will have civil work with four foundations per panel; that the entire structure is supported by nuts and bolts with zero welding which reduces the fragility during high impacts; that it will have flexibility of setting 4 different angles 10 , 15 , 20 , 25 ; that changing the angle once in summer 10 once in winter 25 , can increase annual generation by around 6-7%. 18.4 In view of the foregoing, it is abundantly clear that the roof solar plant, affixed to foundation via nuts and bolts and which has the flexibility of 4 different angles is not an immovable properly but a plant and machinery, The applicant has further stated that they have capitalized the roof solar plant in their books of accounts, the Roof Solar Plant, as is evident is not permanently fastened to the building. Thus, it qualifies as a plant and machinery and is not an immovable property, hence, it is not covered under blocked credit as mentioned in 17(5)(d) of the CGST Act, 2017. Therefore we hold that the applicant is eligible for input tax on roof solar plant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive building of the appellant. 19.4 As the supply and installation of fire safely extinguishers as pointed out above, makes it an immovable properly, it ceases to be a plant and machinery. 19.5 Hence, in view of the above discussions we find that the appellant is not entitled to ITC of GST paid on Fire Safety Extinguishers in view of the provisions of section 17(5)(c) of the CGST Act, 2017. 20. Architect Service Fees and Interior Designer Fees 20.1 The appellant has appointed Architect who will carry out the structural design of their new administrative building. Further they have also hired the services of Interior Designer who will carry out the interior design of their new administrative building. 20.2 We find that it is undisputed that the services of an Architect and Interior Designer availed is with regard to construction of an immovable properly i.e. the new administrative/office building of the appellant. 20.3 The, appellant, we find has contended that the expenses related to Architect services and interior Designing fees is not being capitalized and is charged to Profit Loss Account, to further substantiate their claim for availment of ITC. We find that Accounting Standar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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