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TMI Blog2024 (6) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ffective working of the car parking system. Whether Rotary car parking is movable or immovable? - HELD THAT:- The rotary car parking has been decided to be built in the own land of the applicant, with a view to retain the existing tenants as well as to have full occupancy state. Further, it is not the case of the applicant to plan it to dismantle and move the structure to some other place. Hence, the intention of the applicant is to enjoy the benefit of the civil foundation as well as the car parking fastened to the foundation permanently, until the system ceases to exist or function. The car parking system falls within the meaning of Section 3 (26), as envisaged under General Clauses Act, 1897 i.e. permanently fastened to anything attached to the earth and as envisaged under Clause (c) of the Section 3 of the Transfer of property Act 1882 which reads attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. and thus Rotary Car Parking system is not a movable property as contested by the applicant. Whether the Rotary Car parking falls under the category of plants and machine? - HELD THAT:- As per the explanation to the Section 17 (5) (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s. A. Senthil Maharaj, No. 114, Race Course Road, Coimbatore Central, Coimbatore - 641 018 (hereinafter called as 'the Applicant) are registered under the GST Acts with GSTIN: 33AEQPM3966D2ZA. The Applicant is the provider of taxable service falling under the category of Renting of Immovable Property falling under Service Accounting Code (SAC): 997212 attracting GST@ 18%. 2. They have preferred this application seeking Advance Ruling on the following question: 1) Whether Input Tax Credit is admissible on the ROTARY PARKING SYSTEM falling under HSN Code: 8428 3. The Applicant submitted a copy of challan evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 4. Statement of facts in brief: 4.1 The applicant is supplying services of Renting of Immovable Property and to enhance the quality of output service provided they are desirous of installing a sophisticate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked credits, by any stretch of imagination. The applicant also submitted that as per the explanation to sub-section 6 of Section 17 of the CGST Act, 2017 / TNGST Act, 2017, the expression plant and machinery means 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 other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. 4.6 Further the applicant stated that the parking system is a separately identifiable and distinct product altogether falling under HSN code: 8428 and the identity of the goods remains as such with the same characteristics, prior to installation and even after the product is embedded to earth by bolts, nuts and screws on the bed created for that purpose. That such installation is necessitated only for the purpose of protection from falling down on account of the vibration generated by the machinery and certain unavoidable external natural forces such as rain and wind. That the system can be easily dismantled by removal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain specified conditions. Installation of parking system is intended for enhancement of the service standards and not mandatory. (iv) Lift, being an integral and inseparable part of the building, does not contribute for furtherance of business of the taxpayer. Parking system, being a distinctly different facility, contributes for furtherance of business to fetch enhanced income and resultant GST. (v] After dismantling, the identity and essential characteristics of Lift (as well as the space in the building) would be completely lost. Even after dismantling, the essential characteristics and identity of the parking system will remain intact and would become functional with the same vigour in the relocated area. 4.8 The Applicant further submitted that they would like to state that the fundamental question that may arise in the instant context is whether the parking system can be regarded as the Immovable property. They submitted that by no stretch of imagination, the parking system can be considered as an immovable property, as is evident from the above illustrations. That though there is no definition in the GST Act, 2017 for the expression ''immovable property , Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned authorities of the Centre and State were addressed to report if there are any pending proceedings against the applicant on the issues raised by the applicant in the ARA application and for comments on the issues raised. 5.2 The State jurisdiction Officer viz. the Assistant Commissioner (ST), Trichy Road Assessment Circle stated the following; The applicant is proposing to install a sophisticated multi-layer car parking system to accommodate parking of 18 cars. The applicant's claim that the car parking system is only a movable property is not correct. The structure to be built will be property of immovable on completion of the construction and the structure is to be treated as capital asset to the applicant so long as the existence in business and the use of the structure for parking of car would yield revenue on which GST stands attracted. The applicant is not found eligible to take ITC credit on the purchases of materials involved for the construction of parking system, as envisaged under Section 17 (5) (d) 5.3 The concerned Central authority vide letter GEXCOM/TECH/GST/ 2697/2023-TECH dated 03-08-2023, submitted that the question raised in the application are not pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid immovable property, Rotary Car Parking System falls under the ambit of additions or alterations to the said immovable property i.e. in this case commercial building. In view of the above, it is submitted that the installation and commissioning of the Rotary Car Parking System is goods or services or both received by a taxable person for construction of 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 and hence ITC is not admissible as per section 17 (5) (d) of the CGST Act, 2017. 6. The Applicant, was given an opportunity to be heard in person on 9.1.2024. Shri Arthanarisamy, proprietor and Shri K. Rajendran, Authorised Representative (AR) appeared for the personal hearing. The AR reiterated the submissions made at the time of filing the application. In addition to the same, he furnished a detailed additional submission at the time of personal hearing. The AR stressed on the following points, viz., (i) The work of bringing up the parking facility at the applicant's premises cannot be termed as works contract service, and that the same amounts only a composite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to ensure faster and reliable installation process. 7.5. The applicant submitted that with regard to customer scope of works, as per the said quotation dated 09.05.2023, among others, are as follows: Work No. 2: To complete the civil foundation works as per the foundation drawings provided by Park Layer. Installation engineers from Park Layer would inspect the site on completion of the civil foundation works. Any violations from the furnished drawings would be intimated and corrections to be made accordingly. Work No. 3: Erection support to be rendered by the customer. Required approvals, permissions, local union charges, approvals and other local body issues in the scope of customer. Work No. 4: To provide lighting, ventilation, fire extinguishers and fire alarm systems, if necessary, as per the safety rules. Work No. 7: To provide the material and assistance at site required for placing or fixing of equipment's, electrical panels, Hydraulic power packs, Operator Boxes to floor/walls/columns etc. Such requirement shall be intimated to you prior to installation in time. 7.6. The applicant, citing the eligibility criteria and the conditions stipulated for taking Input Tax C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplier. After completion of the manufacturing process, the supplier would dismantle the system, transport the entire system either as a single lot or in multiple lots as per convenience, to the premises of their customers and reinstall the system in the premises of the customers. 7.10. The applicant further submitted that the entire activity of the supplier relating to supply of the car parking system and installation thereof are duly classified under the GST Tariff and Service Accounting Code (SAC), as follows: Activity Classification Supply of goods, namely other lifting, handling, loading or unloading machinery (For example, Lifts, escalators, conveyors, teleferics). HSN code: '8428 Other installation services not elsewhere classified SAC: 995468 7.11. The applicant submitted that the Supplier generally receives the composite order for manufacturing and installation of car parking system and therefore, the same is to be considered as a composite supply, as defined under Section 2 (30) of the CGST/TNGST Act, 2017, which reads as follows: composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry) on his own account including when such goods or services or both are used in the course or furtherance of business. 7.16. The applicant submitted that as could be seen from the above stipulations of Section 17 (5) (c) and 17 (5) (d) of the CGST/TNGST Act, 2017, the credits are blocked only in respect of the activities relating to construction of an immovable property and not for the installation of parking system, which is to be considered as plant and machinery, in strict sense. The applicant submitted that the specific exclusion of plant and machinery in the said Sections of the GST Act is illustrative of the fact that procurement of the parking system and installation of the same cannot fall within the ambit of blocked credits, by any stretch of imagination. 7.17. The applicant further stated that installation of parking system is an essential input/input service to be used in the course of furtherance of business (output service of Renting of Immovable Property falling under SAC: 997212) and therefore, ITC is admissible in terms of Section 17 (5) (d) of the Act. 7.18. The applicant submitted that the expression plant and machinery , as defined in the explanation appearing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts falling under the works contract service, which are essentially required for placing the Apparatus or Equipment or Machinery for the purpose of stability and achieving optimum level of functioning of the plant and machinery. 7.21. The applicant submitted that as per the scope of works to be executed by the recipient of the goods/services, the civil foundation works are to be completed by the applicant in the instant case, as per the foundation drawings provided by the supplier of goods/services (Park Layer). That it is clear that the parking system is simply installed on the existing civil foundation, as an independent equipment and the disassembly of the system in the factory premises for subsequent assembly at the site is only for the sake of convenience and ease of transportation in lots. 7.22. The applicant further stated that the Parking system is a separately identifiable and distinct product altogether falling under HSN code: 8428 and the identity of the goods remains as such with the same characteristics, prior to installation and even after the product is embedded to earth by bolts, nuts and screws on the bed created for that purpose. The applicant submitted that such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating factors between the seemingly alike parking system and Lift which was submitted by them in their original application mentioned at para 4.6 above. 7.28. The applicant submitted that in respect of the question relating to admissibility of ITC on the parking system, being the input/input service for providing the output service, there are two legally permissible options available for them to result in two possible scenarios, which are listed below: Provision of output service - (i) To the tenants, exclusively: As a Composite supply of services, comprising of the existing service of Renting of Immovable Property falling under SAC: 997212 and parking lot service falling under SAC: 996743 as a facility thereof, where the former is the principal supply of service and the latter is submerged therein. In this case, receipt of consideration for the latter activity would be by way of enhancement of the amount of rent. (ii) To any person, which may or may not include the tenants: As a separate supply of Parking lot service (SAC: 996743), which would be independent of the existing service of Renting of Immovable Property. In this case, consideration for this activity would be received se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of furtherance of the business, for which GST registration has been obtained. 8.4. In view of the above, the applicants have purchased Smart Parking 18XL Part Assembly and their constituent parts, as can be seen from the invoices submitted by the applicant, as detailed below: Sl.No. Invoice No./dt. Description of Goods Price CGST SGST 1 PL/77/23-24 DT. 19.9.2023 Smart Parking 18XL Part Assembly, bolt 16 nos, hex nut 32 nos, Gauge plate 4 nos 40000 3600 3600 2 PL/135/23-24 Smart Parking SM18XL Part Assembly-Frame assembly 4523000 407070 407070 3 PL/137/23-24 Smart Parking SM18XL Part Assembly, pallet with assembly 2457000 221130 221130 Total 7020000 631800 631800 8.5. The applicant is of the opinion that he is eligible to avail the input tax credit under the provisions of the GST Act, as he has fulfilled the conditions enumerated under Section 16 of the Act and also as per the stipulations of Section 17 (5) (c) and 17 (5) (d) of the GST Act, as the credits are blocked only in respect of the activities relating to construction of an immovable property. They further stated that the parking system is a separately identifiable and distinct product altogether falling under HS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only, it takes the shape of the car parking. 8.7. On further perusal of the Quotation of M/s Park Layer Private Limited, vide Quote Number PARK/260/23, dt. 09.05.2023, furnished by the applicant, it is found that the Customer Scope of Work involves completing the civil foundation works as per the foundation drawings provided by Park Layer and on completion of the civil foundation work, it will be inspected by the installation engineers from Park Layer, who are the suppliers of the Rotary Car Parking System. Any violations from the furnished drawings would be intimated and corrections to be made accordingly. Further, the applicant is required to provide erection support by way of obtaining required approvals, permissions and taking care of local body charges, approvals and other local body issues before installation and commissioning of the Rotary Parking. It is also customer scope of work to provide the material and assistance at site required for placing / fixing of equipments, electrical panel, hydraulic power packs, Operator Boxes to floor/walls/columns etc. 8.8. Hence, we find that a specific foundation is created and steel structure which is a basic frame work of the parking s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. In the Tax Revision case 910/2001, in respect of the Commissioner Trade Tax U.P. Lucknow Vs S/S Triveni N.L. Ltd., the question raised was, as to whether the Trade Tax Tribunal is legally correct to allow dealer's claim of exemption on the ground that the machinery installed is immovable property being attached to earth even though the machinery was installed and attached to earth for better functioning and operational efficiency? . On behalf of State, the argument put forth by the State was that, when most parts of machinery are fixed to their bases with bolts and nuts and can be removed by removing the nuts, the same cannot be said that such machineries are permanently fastened in as much as, the same can be moved away by removing the nuts and hence should be held movable property . This argument was noticed and rejected by the Hon'ble High Court of Allahabad with the observation that The question whether a machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Car parking falls under the category of plants and machine? The query as to whether the credit is blocked by the Section 17 (5) of the Act and the claim of the applicant that the specific exclusion of plant and machinery from the category of blocked credits is examined as follows: The relevant provision of Section 17 of the CGST Act, 2017 is reproduced below: (5) Notwithstanding any thing contained in sub-Section (1) of Section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely; Xxxxxx Xxxxxx Xxxxxx (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 re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property:' Further, the expression plant and machinery as defined in the explanation under Section 17 is reproduced below: Explanation .- For the purposes of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilt by utilising any material viz., cement, steel based on requirement and purpose of the structure. 9.4 Further, we find that the Tamil Nadu Combined Development and Building Rules, 2019 defines the terms Building and Structure as follows; Structure means something constructed or built having a fixed base on or other connection to the ground or other. Building means any structure for whatsoever purpose and of whatsoever materials constructed and every part thereof whether used as human habitation or not and includes foundation, plinth, walls, floors, roofs, chimneys, plumbing and building services, fixed platforms, verandah, balcony, cornice or projection, part of a building or anything affixed thereto or any wall enclosing or intended to enclose any land or space and signs and outdoor display structures. Tents, shamianahs, pandals, partaulin shelters and the like erected for temporary and ceremonial occasions shall not be considered as building; In view of the above discussions we find that civil structure refers to any structure for whatsoever purpose and of whatsoever materials constructed and every part thereof to enhance the functioning of a community or society. 9.5 It is im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and Building Rules, 2019, in respect of Automated/ mechanically operated parking system, the Executive authority notwithstanding anything containing in the rules subject to such conditions as may be decided by the executive authority may permit lots/ structures taking into account the safety and environmental aspects. Hence, for installation of rotary car parking system it is felt that prior approval of the competent executive authority is essential in view of the safety and environmental aspects. Further, the submission made with regard to distinction between the lift and the rotary car parking system, it is observed that requirement of car parking is also made mandatory in certain High rise buildings, based on the floor area of the building. 9.7 Further more, the Rotary car parking system is an infrastructure with an aim to cater the need of greater urban density and compactness of cities and to aim at better use of scarce land. The Rotary car parking system provides additional space to park the. vehicles depending upon number of storeys built/preferred. In addition, for the purpose of parking of vehicles in and for retrieving the vehicles out, it will also perform upward/downw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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