TMI Blog2020 (11) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant has contended that the MAAR did not appreciate the technical nature, mobility and characteristics of the 'Paver Blocks' before holding the laid out 'Paver Blocks' as an immovable property. It has further been contended that the subject 'Paver Blocks' can easily be moved from one place to another without being damaged and re-erected there, thereby, conforming to the inherent nature of movable property. In this regard, it is observed that the 'Paver Blocks', once laid over the surface to comprise the parking system, cannot be moved as it is to another place as the same is also supported by the edge restraints provided by the outer wall constructed along the perimeter of the parking area of the said stock yard, which causes the paver blocks to get fastened or embedded to the earth permanently - The fact that it would clearly not be intention of the Appellant to move these 'Paver Blocks' from one place to another, lends certain degree of permanency to the 'Paver Blocks' laid over the surfaces, which is the essential characteristics of the immovable property. The issue which is important here is whether it was the intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MAAR). BRIEF FACTS OF THE CASE 3.1 The Appellant is a private Limited company registered in the state of Maharashtra under MGST Act, 2017 and CGST Act, 2017 holding GSTLN 27AAACS4949P1ZN and also registered under the Companies Act, 2013 having its registered office at No.3, Smith Road, Chennai -600 002. 3.1 The Appellant is engaged in providing warehousing. storage and support services to the Original Equipment Manufacturers (OEMs) in automobile industry having the varied customers such as Hyundai Motors, Mahindra Mahindra, Ashok Leyland, TAFE etc. 3.2 The Appellant has a fleet of 80 car carrier vehicles with which it carries the cars/tractors of various automobile OEMs from their respective plants to the designated Regional Sales Depots/show rooms of their dealers. During the course of rendering these services, the cars are stored in the stock yard of the Appellant prior to their transit to the respective car dealers. On storage rentals of these vehicles, the Appellant collects and pays the applicable GST at the rate of 18% under the head 'Stock Yard Management Services'. 3.3 The Appellant has purchased 'Paver Blocks' which is subject to tax at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the aforesaid explanation of Section 17(5)(d) of the CGST Act, 2017. It was further submitted that as per explanation to section 17(5)(d), the prohibition to avail input tax credit is applicable only in respect of expenditure, which is capitalized to be immovable property in the books of accounts. Even as per the accounting standards purchase of paver blocks has to be treated as revenue expenditure. (d) These 'Paver Blocks' having interlocking facility and gaps therein getting tilled with sands, are laid on the surface as movable property. which are capable of being removed, re-laid, and re-used on any other location after the contract period gets over. It is to be noted here that its degree of attachment, and thus placement to the land is superficial and not deep, or permanent in nature. it is not very strong unlike a cement road; The object of annexation of paver blocks to the land is for a temporary purpose and can be removed and used elsewhere multiple times because it can withstand wear and tear. (e) The Appellant had relied on the decision of Hon'ble Supreme Court in the case of Sirpur Paper Mills Ltd. vs The Collector of Central Excise [97 E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of renting the place; 3.8 Being aggrieved by the aforesaid Advance Ruling, passed by the MAAR, the Appellant has preferred the present appeal. GROUNDS OF APPEAL 4. The Appellant, in their Appeal memorandum. have, inter-alia, mentioned the following grounds of appeal: 4.1 That the laying of Paver Blocks on the land does not amount to construction or building of an immovable property as per the explanation of Section 17(5)(d) of the CGST Act. 2017, especially when the expenses for the same has not been capitalized towards Land in the audited books of accounts of the Appellant and factually these expenses have been debited and claimed as revenue expenditure by the Appellant: 4.2 That the Maharashtra AAR did not properly appreciate the technical nature, mobility and characteristics of Paver Blocks and its technology, thereby, denying it as a Chattel ; 4.3 That the MAAR erred in justifying the impugned order by relying on the decision of Hon'ble Supreme Court in the case of Municipal Corporation of Greater Bombay (1991 Supp (2) SCC 18) which was a case differing in facts and was concerning Petroleum storage tanks and was concerning levy of Municipa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alterations or repairs of an immovable property. 5.2 As regards the Appellant's contention against the findings of the MAAR to the extent that the 'Paver Blocks' laid over the surface are permanent in nature and hence the activity of laying of the Paver Blocks is considered to be construction of immovable property , wherein the Appellant have argued that the MAAR has not appreciated the technical nature, mobility, and characteristics of the 'Paver Blocks', the Respondent has submitted that just because the Paver Blocks' laid over the surfaces of the stock yard can be removed and re-erected at some other places. the same would not be considered movable property as the mere mobility and reusability of the Paver Blocks cannot be the only tests for the determining the permanency of the same. The permanency of the subject structure i.e. the Parking System' comprising of the 'Paver Blocks' would have to be tested under the light of the frequency of the relocation and the extent of ease of relocation of the Paver Blocks, laid on the surface with the help of the gap filling materials, like sands, and the outer walls, which is executed by the skilled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve materials for keeping the blocks together, rather the blocks are joined together owing to the interlocking features/style of the said Paver Blocks and thus do not require the demolition of the Paver Blocks laid on the land before relocating the same on another piece of land as and when required. 6.2 He heavily relied upon the Karnataka AAR Judgment in the case of the Wework India Management Pvt Ltd, wherein the Advance Ruling Authority held that the detachable wooden flooring would not be considered as immovable property as the same can be detached and reused elsewhere without being damaged and there is no permanence in the said wooden flooring. He also made mention of the Karnataka AAAR Judgement in the same case. i.e. Wework India Management Pvt Ltd, wherein the Karnataka AAAR, while applying the dual test, i.e., (i) extent of annexation and (ii) object of annexation, to examine the permanency of the item attached to the earth, allowed ITC even on glass sliding and partitions which were fixed to the floor by nuts/bolts. 6.3 He also contested the Advance Ruling observation wherein the MAAR has not considered the Hon'ble Odisha High Court Judgment in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctures like outer wall etc. are essential component in the construction of such pavements, parking area, road, etc, which involve the uses of the interlocking paver blocks. This is also true in the Appellant's case, where the outer wall constructed along the perimeter of the parking area provide the edge restraints needed for keeping the Paver Blocks together to constitute the parking area for the vehicles in the stockyard maintained by the Appellant. Thus, the Paver Blocks, laid over the land, which is duly supported by the outer wall constructed along the perimeter of the parking area, result into construction of the immovable property. Accordingly, the Appellant are not eligible to avail ETC in respect of the Paver Blocks. DISCUSSIONS AND FINDINGS 7. We have carefully gone through the appeal memorandum encapsulating the facts of the case and the grounds of the appeal along with other relevant documents. We have also examined the impugned ruling passed by the MAAR, wherein it has been held that the Appellant was not entitled to avail Input Tax Credit in respect of taxes to be paid on its purchase of paver blocks in terms of Section 17(5)(d) of the CGST Act, 2017. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the outer walls helps the 'Paver Blocks to remain attached and fixed to the earth. It can clearly be implied here that had there been no filling materials and the outer walls, the laying of Paver Blocks on the surfaces would not have yielded desired result attributable to the fact that the 'Paver Blocks would not remain attached to the surface, and would get displaced once the vehicles having considerable weight starts moving on them while being parked at the intended automobiles stock yard. Once it has been established that the 'Paver Blocks' are attached to the land/surface, the same is considered as an immovable property in terms of its definition provided under the General Clauses Act, 1897. 10. As regards the Appellant's reliance on the Hon ble Supreme Court Judgment in the case of Sirpur Paper Mills Ltd. vs The Collector of Central Excise [97 ELT 3 (SC)] to contend that the merely laying of the 'Paver Blocks' on the surface for the creation of better parking facility would not be considered as construction of an immovable property , it is observed that in the said case the issue was whether the machine which was affixed to the ground co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant has contended that the MAAR did not appreciate the technical nature, mobility and characteristics of the 'Paver Blocks' before holding the laid out 'Paver Blocks' as an immovable property. It has further been contended that the subject 'Paver Blocks' can easily be moved from one place to another without being damaged and re-erected there, thereby, conforming to the inherent nature of movable property. In this regard, we observe that the 'Paver Blocks', once laid over the surface to comprise the parking system, cannot be moved as it is to another place as the same is also supported by the edge restraints provided by the outer wall constructed along the perimeter of the parking area of the said stock yard, which causes the paver blocks to get fastened or embedded to the earth permanently. It has to be dismantled before moving to some another place. The fact that it would clearly not be intention of the Appellant to move these 'Paver Blocks' from one place to another, lends certain degree of permanency to the 'Paver Blocks' laid over the surfaces, which is the essential characteristics of the immovable property. Hence. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antle it frequently and take it to any other place. 14. The Appellant has referred to the judgement of the Orissa High Court in the case of Safari Retreats (: W.P. (C) No. 20463 of 2018 dt 17/04/2019) and have contended that the High Court has held that the provisions of Section 17 (5)(d) have to be read down and benefit of ITC has to be given on the construction of shopping malls. We have gone through the said judgement. The question in the present case is whether ITC is allowed to the Appellant - an eventuality which depends on whether paver block is immoveable property or not and we have already seen how the arguments both from the Appellant and the jurisdictional officer revolve around the same. In the Safari Retreats judgement, the High Court had to just decide whether ITC is available to the appellant - the question whether malls is immoveable property or not was not before the Court. Therefore, there being an integral difference in the issues, we say that the said judgement is not applicable to the present case. 15. The Appellant has contended that since the expenses incurred on the purchase of the Paver Blocks' are not capitalized in the books of account, r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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