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2023 (5) TMI 126 - AAR - GSTAllowability of Input Tax Credit - construction of shed using pre-fabricated technology - section 17(5)(d) of the CGST/ TGST Act - HELD THAT:- As seen from the facts of the case the appellant erects a ‘PFS’ using prefabricates structures. The overlying structure along with the land on which it erected constitutes the ‘PFS’. The ‘PFS’ is meant for business activity and therefore is associated with the beneficial enjoyment of the land on which it is constructed - Reference may be made to clause 4(v) of the Circular No. 58/1/2002-CX dated 15/01/2002, where it is concluded that “if items assembled or erected at site and attached by foundation to earth cannot be dismantled without substantial damage to its components and thus cannot be reassembled, then the items would not be considered as moveable and will, therefore, not be excisable goods.” Clearly, the ‘PFS’ cannot be relocated by unfixing the pre-fabricated structures alone. The dismantling of the floor, which is the most important component of the ‘PFS’, is not possible without substantial damage to the foundation. Section 17(5)(d) bars any taxpayer to avail the benefit of Input Tax Credit in case where the goods or services or both received by the said person are used for the construction of an immovable property even if it is in the course or furtherance of business - the contention of the applicant that the very reason why ‘PFS’ is preferred over conventional building is that it offers movability doesn’t make him eligible for availing ITC as per Section 17(5) of the CGST/TGST Act’ 2017. This is because when a ‘PFS’ is assembled in a place the intention is definitely not to make it a movable structure but rather to conduct the business permanently beneath it i.e. on the RCC platform to which it is attached. ‘PFS’ has more flexibility than the conventional structures in facilitating hassle-free shifting based on changing business requirements but that doesn’t make it a movable structure as the intention of establishing shed or ‘PFS’ is to continue business permanently on the RCC platform to which it is attached. The pre-fabricated movable components joined to make a structure do not constitute as separate property of the ‘PFS’. They are building blocks applied to a civil structure attached to the land to construct a complete ‘PFS’. They have no separate existence from the ‘PFS’. The ‘PFS’ cannot be conceived without the beneficial enjoyment of the civil structure, which is an integral part of the property. On this basis, ‘PFS’ being constructed is classified as an "immovable property" and credit is not admissible on inward supplies which include pre-fabricated movable components and also on inward Works contract services pertaining to ‘PFS’ technology as per section 17(5)(c) and section 17(5)(d) of CGST/TGST Act’ 2017.
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