TMI Blog2020 (7) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... l be removed and re-erected frequently. They are meant to be permanently fixed to earth but whenever the need arises the applicant may remove them and re-erect - the applicant would not use the paver blocks as in the subject case with an intention to remove it and use the same as a movable property. The subject goods would qualify as immovable property and therefore Applicant cannot avail ITC in the subject case as per Section 17(5) (d) of the CG ST Act, 2017 - answered in negative. - GST-ARA-36/2019-20/B-41 - - - Dated:- 18-3-2020 - SMT. P VINITHA SEKHAR, SHRI. A. A. CHAHURE, MEMBER PROCEEDINGS (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. SUNDHARAMS PRIVATE. LTD, the applicant, seeking an advance ruling in respect of the following question. Whether applicant is entitled to avail Input tax credit under CGST/CGST Act in respect of taxes to be paid on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t services. 2.5 Laying of Paver Blocks on land does not amount to construction of Immovable property u/s. 17(5) (c) of the CGST Act, 2017. Expenses on the Paver Blocks are not capitalized as a part of immovable property (Land) in the applicant s books of accounts, hence the input credit on the same is not disallowable u/s. 17 (5) (d) r.w. explanation to section 17(5) of CGST Act, 2017. Further, as per explanation to Section 17(5)(c) (d) of CGST Act 2017, the prohibition to avail input tax credit is applicable only in respect of expenditure which is capitalized in the books of account. Hence, if the expenditure on purchase of paver block is not capitalized treated as revenue expenditure, there is no bar on availing credit. 2.6 These paver blocks are laid on the land as movable property and therefore, can be easily dismantled and re-laid at any other location. Paver blocks are not fastened or permanently embedded on the earth as part of the land, rather they are only laid on the plain surface for parking of cars. Applicant company has fully complied with the conditions contained in the section 16(2) of CGST Act for claiming of ITC. 2.7 Laying of the paver blocks cannot a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al officer are as under:- 3.1 The submissions of the applicant that laying of paver blocks on the land does not amount to construction is not acceptable on the following grounds:- 3.1.1 The purpose of laying of paver blocks as per applicant is to ensure efficient parking of automobiles during contract period. If the cars placed on the ordinary ground, it will be subject to the quicker wear and tear due to accumulation of water, dust etc. in the wheels. Hence only laying of paver blocks in loose form on the land is not sufficient. To serve the applicant s purpose, compact, firm structure and close fixing of blocks is required. However, applicant is silent on whether cementing material or interlocking blocks used or not. But it appears from photographs attached by the applicant that, paver blocks are fastened to land using interlocking blocks and firm support of outer wall. These blocks are not kept loosely on the ground. Hence, mere cementing material not used doesn t mean paver blocks are not fasted to earth. Rather with support of outer wall and interlock system blocks are fastened to earth. Further, laying of such block is time consuming, skill full job requires to be carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; paver blocks once laid on the land are not movable to another place of use in the same position unless dismantled and laid again at later place. Hence, the paver blocks are permanently embedded to earth and hence laying of the paver blocks on the land amounts to construction of immovable property u/s 17(5). Therefore. input tax credit is not allowable to M/s. Sundharams Pvt Ltd. 04. HEARING Preliminary hearing in the matter was held on 26.11.2019. Sh. Subhash Chhajed, C.A. along with Sh. Muthuswami, G.M. appeared, and requested for admission of their application. Jurisdictional Officer Sh. Prashant Patil, Dy. Corhmr. of S.T.( E-601), Large Tax Unit-1, Mumbai also appeared. The application was admitted and called for final hearing on 22.01.2020. Sh. Subhash Chhajed, C.A., Ms. Kajol Jain, C.A., Sh. Muthuswami, G.M. Sh. M Ganeshan, V.P. and Sh. Balakrishna G.M. appeared made oral and written submissions. Jurisdictional Officer Sh. Prashant Patil, Dy. Commr. of S.T.( E-601), Large Tax Unit-1, Mumbai appeared and made written submissions. We heard both the sides. 05. DISCUSSIONS AND FINDINGS: 5.1 We have gone through the facts of the case, documents on record a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and removed frequently. It is not the case that in case it is desired to do away with it, one can remove the system and put it -as it is at another location. Hence the question in these set of facts is whether the impugned activity could be said to be one as resulting into immovable property. 5.5.1 The term immovable property has not been defined under the GST Act. However, there are a catena of decisions of various Hon ble Courts deliberating on what constitutes an immovable property . 5.5.2 In the case decided by the Supreme Court in T.T.G. Industries Ltd. v. CCE, (2004) 4 SCC = 2004 (5) TMI 77 - SUPREME COURT , the judicial member concluded that, erection of mudgun and tap hole-drilling machine results in erection of immovable property and found support in the decision of the Supreme Court in Municipal Corpn. of Greater Bombay v. Indian Oil Corpn. Ltd. [1991 Supp (2) SCC 18 = 1990 (11) TMI 407 - SUPREME COURT and held that the twin tests laid down by this Court to determine whether assembly erection would result in immovable property or not were fully satisfied in the facts of this case. It was concluded that the test laid down by the Supreme Court is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The impugned car parking system, to be installed on a vacant plot of land, by way of laying of Paver Blocks, does not result into supply as chattel. In fact, before installation, there can be no goods as such which could be called a parking system . The system requires substantial work of interlocking of the Paver Blocks using support from the boundary walls of the said land, to be done at the site to be called a parking system . Once made operational the parking system obtains a state of permanency. It is not such as can be easily removed from the existing place and put into place at some other location. It is also not such that there is an intention to put it into some other place. Further, apart from that the goods cannot be re-erected as in the previous place as the requirement of each place is different. 5.8 From the submissions made by the applicant we find that the main reason for use of paver blocks is to keep the tyres of the vehicles in good condition with no wear and tear, to have longevity, durability and flexibility to re-use. The flexibility to re-use does not mean that blocks will be removed and re-erected frequently. They are meant to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10 The applicant has submitted that Even assuming without admitting that permanently fitted Paver Blocks acquire the character of Immovable Property , the claim of Appellant for input tax credit has to be allowed based on the decision of Orissa High Court s decision in Safari Retreats Pvt Ltd. Vs. Chief Commissioner of CGST = 2019 (5) TMI 1278 - ORISSA HIGH COURT . 5.10.1 Eligibility of cenvat credit is governed by the provisions of Chapter V of the CGST Act consisting of Sections 16 to 21. While Section 16 mentions the eligibility and conditions for taking input tax credit, Section 17 speaks about apportionment of credit and blocked credit. Section 17 (5) states that 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 certain cases. Thus in the subject case it is imperative to find out whether the applicant is barred from taking under Section 17 (5) of the said Act. 5.10.2 We now reproduce the provisions of Section 17 (5) (d) of the CGST Act, which is as under: Notwithstanding anything contained in sub-section (1) of Section 16 and sub-section (1) of Section 18, inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Safari Retreats Pvt. Ltd., and another V/s Chief Commissioner of Central Goods Service Tax others = 2019 (5) TMI 1278 - ORISSA HIGH COURT . In the said case it is seen that the party had constructed malls which were given further on lease. While holding that Section 17 (5) (d) was not ultra vires, the Hon ble Court ruled that the party was eligible for credit. 5.10.6 We find that the department has filed an appeal against the said judgement of the Hon ble High Court Orissa in the case of M/s. Safari Retreats Pvt. Ltd., and another V/s Chief Commissioner of Central Goods Service Tax others = 2019 (5) TMI 1278 - ORISSA HIGH COURT , which is presently pending. The Hon ble Supreme Court, in the case of Union of India V/s West Coast Paper Mills Ltd., as reported in [2004 (164) ELT 375 (SC)] = 2004 (2) TMI 344 - SUPREME COURT , has held that once a special leave to appeal is granted and appeal is admitted, correctness or otherwise of judgement of Tribunal becomes wide open and in such appeal, Court is entitled to go into both questions of Tact and as well as law and correctness of judgement is in jeopardy. Appeal is considered to be a continuation of suit and a de ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
