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TMI Blog2020 (9) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... acility Space (warehouse) in Haryana and would be constructing additional 3,50,000 Sq. feet more. A company engaged in manufacturing and trading of 2 wheelers was interested in leasing of the space and has entered in contract with the Appellant. The proposed contract requires the Applicant to undertake:- a.) To create multilevel storage facility with fabricated sheets fixed on the nuts and bolts as requirement of the Lessee for storage of two wheelers in the warehouse; b.) To provide to the Lessee the loading and unloading ramps for the vehicles as per standards of Lessee; c.) To provide full electricity backup at the premises at all times for which the Applicant has installed a generator with required load capacity and shall also be responsible for the upkeep and maintenance of the generator (including the fuel); d.) To maintain the premises inclusive of service-lift and other electrical equipment on its own cost in good condition, including cleaning and housekeeping. Question for Advance Ruling: Appellant had raised the following questions for Advance Ruling before the Authority for Advance Ruling:- 1. Whether Input Tax Credit of GST in respect of inputs/ Capital Goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not being constructed on the Appellant's own account. The warehouse has been constructed as per the requirement of the lessee. The Agreement has been entered into with a single party for 5 years. There is no alternative use of the warehouse. (Thus Section 17(5)(d) is not attracted). For ready reference, Section 17(5)(d) is being reproduced here:- "(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:- (a) .... (b) .... (c) .... (d) 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. Explanation.- For the purposes of clauses (c) and (d), the expression 'construction' includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;" 6. In the light Hon'ble Supreme Court's decision in Hussain bhai vs. Alath Factory Thejilali Union [(1978) 4 SCC 257] that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the restriction of Section 17(5)(d) is not applicable to the Appellant's case. 17. The Appellant has heavily relied on the Orrisa High Court's decision in Safari Retreats. The facts are similar to their case. 18. That, thus, the AAR has violated the judicial discipline. 19. The Bombay High Court has, in CIT Vidarbha vs. Godavari Devi Saraf, held that law laid down by the High Court, even in it is of a different state, ought to be respected. 20. In CCE vs. Valson Dyeing Bleaching and Printing Works [2010 (259) ELT 33 (Bom.)] the Bombay High Court had upheld the Tribunal decision wherein Tribunal had followed a decision of Madras High Court treating as binding. In this case the Tribunal had no jurisdiction to examine the validity of Notification 42/98 but relying on Madras High Court decision the Tribunal held that the notification was ultra vires the provisions of the Act. 21. In Panipat Coop Sugar Mills 2013 (293) ELT 66 (Tri-Del.) the Tribunal had relied on the decisions of 3 High Courts. 22. There was no decision on the relevant issue of the jurisdictional High Court, in the Panipat Coop Sugar Mills case. Similarly there being no contrary decision of the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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. Explanation.- For the purposes of clauses (c) and (d), the expression- construction! includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; The Explanation to sub-Section 17(5) is also relevant and is reproduced below: - Explanation.- For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes,- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises." 4. That, the exclusion is when the Immovable Property is meant to be sold post issuance of a completion certificate since such levy does not attract GST; that since there is a break in the tax-chain and no GST would be payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the Hon'ble Orrisa High Court's decision and this decision is binding on the lower appellate authorities, despite it having been passed by a High Court of difference jurisdiction. Legal Position The legislative intent is abundantly clear from Section 17(5)(d) which is reproduced here again for ready reference:- "(d) 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. Explanation.- For the purposes of clauses (c) and (d), the expression,- constructional includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property; As may be seen, the ITC is not admissible where the immovable property is constructed on the taxpayer's own account, and is meant for furtherance of business. Hence there is clearly a break on the admissibility of ITC when an immovable property comes into existence; unless the same is constructed for a prospective buyer and element of construction service is involved. The Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBIC in the Instruction F. No. 276/114/2015-CX.8A, dated 9-2-2016has observed: - "The Apex Court in Kunhayammedv. State of Kerala - 2001 (129) E.L.T. 11 (S.C.) has dwelt extensively upon the aspect as to when a decision of the Court in a SLP would be binding and when not. The Supreme Court observed that there are two distinct stages: (a) Granting of special leave to appeal; and (b) Hearing the appeal. If the SLP is dismissed at the stage of special leave without a speaking or reasoned order, there is no res judicata, no merger of the lower order and the petitioner retains the statutory right, if available of seeking relief in review jurisdiction of the High Court. If the SLP is dismissed at the first stage by speaking a reasoned order, there is still no merger but rule of judicial discipline and declaration of law under Article 141 of the Constitution will apply. The order of Supreme Court would mean that it has declared the law and in that light the case was considered not fit for grant of leave. Once leave is granted but SLP converted into appeal is dismissed with or without reasons, merger results and law is declared." The department has filed an appeal against the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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