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TMI Blog2024 (6) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and thereby an immovable property. As the installation of the air conditioning and cooling system and ventilation system via a works contract service, makes it an immovable property, it ceases to be a plant and machinery. The appellant is not eligible to avail ITC on supply of air conditioning and cooling system and ventilation system since it ceases to be a plant and machinery and is blocked under Section 17 (5) (c) of CGST Act, 2017 as the same is works contract services for construction of an immovable property. Appeal dismissed. - SAMIR VAKIL AND B.V. NAGA KUMARI, MEMBER Present for the Appellant : Shri Chitresh Gupta and Shri R Sharma. At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act, 2017 and GGST Act, 2017 ) are 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a moulding machine; that all the parts of Air conditioning and cooling system get assembled at the site and fitted on the wall and roof and the floor of the building; that the different parts of Air conditioning and cooling system consequent to being fitted in the building, loose their identity as machines or parts of machines and become a system, namely Air conditioning and cooling system. that AC System comes into existence by assembly and connection of various components and parts; that though each component is dutiable to GST; that though Air conditioning unit is dutiable as per MSN, an Air conditioning plant/system is not dutiable; that even in terms of 37B order No. 58/1/2002-CX dated 15-1-2002, issued for the purpose of uniformity in classification of goods erected and installed at site, the air conditioning system has been held to be in the nature of systems and not machines as a whole; that they come into existence by assembly and connection of various components and parts; that though each component is dutiable, the air conditioning system as a whole cannot be considered to be excisable goods; that on the question of whether an air conditioning plant is a movable properl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the moulded part can be cooled taken out; the term system is not defined in GST Act; that the Air conditioning system is nothing but a group of inter-related and inter-dependent machines performing a desired task; that the HVAC system is also a machine; that different machines may become part of air conditioning and cooling system; that each machine has a role to play like the chiller provides cool air, pumping system provides cool water, exhaust system ensures that there is sufficient ventilation etc.; that they become part of an Air conditioning system and the individual machines do not lose their identity; that in terms of CBEC Circular No. 58/1/2002-CX dated 15-1-2002, it can be inferred that plants are actually a system or a network of machines; that the air conditioning and cooling system and ventilation system is a network of machines, put together for the operational efficiency; that HVAC system may not be considered as a single unit; that the circular deals with the excisability of Air Conditioning Plant/system; that the intention of the circular was to determine whether it is excisable goods or otherwise; that even if ail the machines are part and parcel of HVAC System ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. ..................... ........................ (5) Notwithstanding anything 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:- (c) works contract services when supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioning and cooling system and ventilation system, for which this appeal is preferred. 13 Air Conditioning Cooling system and Ventilation system 13.1 The appellant s contention is mentioned in para supra and is not being repeated for brevity. However, his primary contention still being that when the System description has clearly specified requirements separately for factory area canteen building and server room, it cannot be construed as one system merely on account of issue of single work order issued to a single vendor; that the invoices do not describe the nature of supply because the vendor is supplying various machines and not one standalone system thus invoices do not contain the description of any system; that the Air conditioning system is nothing but a group of inter-related and inter-dependent machines performing a desired task; that the HVAC system is also a machine; that though the machines become part of an Air conditioning system, the individual machines do not lose their identity; that the HVAC system is also a machine entrusted to provide cooling for all production processes and area and hence ITC cannot be disallowed under section 17 (5) (c) of CGST Act. Similar gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Air conditioning system is nothing but a group of inter-related and interdependent machines performing a desired task; that they do not lose their identity, is not a legally tenable argument. It is evident, from the photographs reproduced in the impugned ruling dated 30.7.2021 at para 5.1, the Air Conditioning and cooling system and ventilation system becomes a part of the building once it is installed and thereby an immovable property. 13.6 It is in this context that we would like to refer to CBEC s [now CBIC] Order No. 58/1/2002-CX dated 15.01.2002, wherein under Para 5 (iii), with regards to Refrigeration/ Air-Conditioning Plants, it is mentioned as follows: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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