TMI Blog2019 (10) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. M/s Wework India Management Private Limited, (called as the Applicant hereinafter), having GSTIN number 29AADCH8710J2ZB, has filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 and section 97 of the KGST Act, 2017, in FORM GST ARA-01 discharging the fee of ₹ 5,000-00 each under the CGST Act and the KGST Act. 2. The Applicant is a Private Limited Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question:- a) Whether input GST credit can be availed by the applicant on the detachable 14mm Engineered Wood with Oak top Wooden Flooring which is movable in nature and capitalized as furniture and fixture , and is not capitalized as immovable property ? b) Whether input GST credit can be availed by the applicant on the detachable sliding and stacking glass partition which is movable in nature and capitalized as furniture and fixture , and is not capitalizes as an immovable property? 3. The applicant furnishes some facts relevant to the stated activity:- a. The applicant states that he is in the business of supplying s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreneurs, technology start-up companies, freelancers, small businesses and large enterprises. Therefore, on the basis of above submissions, given that the Applicant procures Detachable 14mm Engineered wood with Oak top wooden flooring which are installed in office spaces rented out by the Applicant, the condition as provided under Section 16 for availment of ITC stands satisfied. 4.2 The applicant argues that restriction provided under section 17(5)(d) does not apply to 14 mm engineered wood with Oak top wooden flooring for the following reasons: 4.2.1 Relevant portions of Section 17(5) of the CGST Act reads as under:- (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) ....................... (b) ....................... (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; (d) goods or services or both received by a taxable person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from licensee . 4.2.5 The applicant argues that from the above decisions that the word for has been defined to mean in the interest of, to the benefit of, in defence of, in support or favour of, etc. Based on the above rationale, it can therefore be concluded that in order to be covered by the restrictions provided under Section 17(5)(d), the goods or services must be used directly for construction of immovable property. 4.2.6 The applicant states that in other words, with reference to section 17(5)(d) of CGST Act, read with the explanations provided therein, credit eligibility of goods or services or both is restricted only when the same is for construction of an immovable property . 4.2.7 The Detachable 14mm Engineered wood with Oak top wooden flooring are not inextricably linked to the construction itself. They are only an addition added above the flooring already present in the fully constructed building. Credit restriction is with respect to construction only when capitalized as immovable property. 4.2.8 Further, the applicant submits that for the purposes of clause (d) of section 17(5) of CGST Act, the expression construction has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in this regard he argues as under: 6.1 The Applicant submits that anything embedded to the earth and which cannot be dismantled and moved, strictly are covered under the ambit of immovable property , thus restricting the same from availment of ITC as per Section 17 (5)(c) (d) of the CGST Act. 6.2 The term immovable property has not been defined under GST Act, therefore reference needs to be taken from General Clauses Act, 1897. 6.3 Section 3(26) of the General Clauses Act, 1897, does not provide an exhaustive definition of the said expression. It reads :- immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. 6.4 Similarly, Section 3 of the Transfer of Property Act, 1882 does not spell out an exhaustive definition of the expression immovable property . It simply provides that unless there is something repugnant in the subject or context immovable property under the Transfer of Property Act, 1882 does not include standing timber, growing crops or grass. 6.5 Though the terms attached to the earth are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-locking wooden flooring system. Different manufacturers have different names for their products, and some call interlocking hardwood flooring by other names. Interlocking hardwood flooring is also called locking hardwood flooring or click-together hardwood flooring, as it does make a clicking sound when it is put together. The wood used for flooring is attached by using a foam called polished streap foam. At ground level, a cementious bare panel is erected using pedestrals. Thereafter, foam is used to lay the wood. The wooden flooring in this case, can be easily detached and reused. 7.1.6 From the above, the applicant argues that it is understood that there are two types of fittings of the wooden flooring; one being glued down where the same cannot be dismantled and re-used; the other being inter-locked by using a polished streap foam where the wood can be removed without damaging the area where it is fixed and re-used. 7.1.7 Thus, the Detachable 14mm Engineered wood with Oak top Wooden flooring consequently are not restricted under Section 17(5). 7.2 Detachable sliding and stacking glass partitions procured by the Applicant are movable in nature. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as immovable property for the following reasons:- They are not immovable property; They cannot be said to be attached to earth; The setting up itself is not intended to be permanent at a given place. It can be moved based on business requirements. 8.2 The Applicant further places reliance on the advance ruling issued by the Authority of the advance ruling in the case of M/s BAHL Paper Mills LTD = 2018 (6) TMI 431 - AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND , where the question was whether credit will be available on office fixtures furniture, AC, plant sanitary fittings on the newly constructed building on its own account, for furtherance of business, and is capitalized in books of accounts. It was held that as per the explanation to Section 17 of the CGST Act, availment of credit was not admissible in respect of land, building or any civil structure; therefore sanitary fittings being the integral part of the land was not an admissible credit. However, credit of GST is available on office fixtures furniture, A.C. plant. The said advance ruling has placed reliance on the CB1C Board Circular No. 943/04/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualify as eligible input tax credit. 9. FINDINGS DISCUSSION: We have considered the submissions made by the applicant in their application for advance ruling as well as the contentions made by Sri.Harish Bindumadhavan, Advocate, during the personal hearing. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts. At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 9.1 There is no doubt that the applicant is involved in the provision of shared workspaces and office spaces to the tenants and procures goods and services from various contractors for fitting out the work spaces and provides the said work spaces on rent as shared work spaces. 9.2 The applicant has referred to section 16(1) of the CGST Act which reads as under:- (1) Every registered person shall, subject to such conditions and restrictions as may be prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to note that section 17(5) overrides section 16(1) and any input tax credit shall not be available in respect of,- (i) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; and (ii) 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. The term construction includes re-construction, renovation, additions or alternations or repairs to the extent of capitalization to the said immovable property. 9.5 The term construction includes additions to the immovable property to the extent of capitalization. The certificate of the Chartered Accountant also shows that the additions are capitalized in the books of accounts under the Fixed Assets Head Furnitures and Fixtures . Nowhere is it said that the capitalized amount needs to be declared as in the books of accounts within the value of immovable property i.e. buildings. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building. Hence the fixing of sliding and stacking glass partitions amounts to addition or alteration to an immovable property and hence are used for the construction of an immovable property and hence input tax credit shall not be available on,- (i) the works contract services when supplied for construction of immovable property; and (ii) the goods or services or both received by a taxable person for construction of an immovable property on his own account even when it is used in the course or furtherance of business. Coming to the next issue of fixing of 14mm Engineered wood with Oak top wooden flooring, the applicant states that the wood used for flooring is attached by using a foam called polished streap foam and at ground level, a cementious bare panel is erected using pedestals and thereafter, foam is used to lay the wood. The wooden flooring in this case can be easily detached and reused. This only adds to the value to the building and is not sine qua non for the office space, unlike the partitions. It is also pertinent to note that the wooden flooring which is detachable can be removed and replaced without affecting the office space. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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