TMI Blog2023 (7) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... ructed the warehouse and has accounted for the same in his books of accounts and retains the ownership/ title of the said warehouse. Further, the said warehouse is being used by the applicant for providing outward supplies of warehousing service and/or renting or leasing service - the warehouse has been constructed in the applicant s own account and the contention of the applicant in this regard is not acceptable. Whether the warehouse constructed by the applicant can be regarded as an immovable property or not? - HELD THAT:- In the instant case, it is not the case that the applicant and nor the intention, that if he desires so, he can remove the entire warehouse with its flooring without any damage or deterioration and re-erect it on other piece of vacant land. The intention behind the construction of the warehouse, as it has been submitted by the applicant, is to let it out and earn rental income from it, i.e., to provide outward supplies of warehousing service and/or renting or leasing service - the warehouse as constructed by the applicant, for its permanent characteristics and in absence of mobility like other goods, would be regarded as immovable property and therefore t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in the proviso to Section 100 (2) of the GST Act. Every such appeal shall be filed in accordance with Section 100 (3) of the GST Act and the Rules prescribed thereunder, and the Regulations prescribed by the West Bengal Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression GST Act would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be engaged primarily in the business of manufacturing of pneumatic rock drills, jack hammers, equipment, spare parts and accessories used in mining/construction industry. 1.3 The applicant submits that as a part of its business expansion plan, it decided to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting, plumbing, structural erection, electrical installation, etc. IV. Consultancy service V. Cement, marble, paver block, shutter door, electrical equipment, fire protection system and insulation, etc. 2.3 The applicant states that inward supplies received for construction of the said warehouse has following attributions: I. Inward supplies relating to construction of building (i.e. construction service provided by builders, developers contractor); II. Inward supplies relating to goods services, which are directly used for construction of building; III. Inward supplies relating to expenses in the form of repairs maintenance, additions, alterations etc., which are capitalized in the books of account; IV. Inward supplies relating to expenses in the form of repairs maintenance, additions, alterations etc., which are not capitalised in the books of account. The applicant company had paid IGST, CGST and WBGST of Rs. 4179658.75, Rs. 2090857.37 and Rs. 2090857.37 respectively on inward supply of said input/input services used for construction of said ware house. 2.4 According to the applicant, while section 16 of the GST Act entitles any re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own goods. 2.7 Further, the explanation here clarifies that the term construction will only include re-construction, renovation, additions, alterations and repairs to the extent they are capitalized and added to the value of immovable property. Hence any expense made for construction which is not capitalized or debited in the revenue account will not form a part of section 17(5)(d) of the GST Act. 2.8 The applicant contends that that pre-engineered steel structures were used with nut bolt technology to a foundation of civil structure for construction of the said warehouse and said structures can be detached and dismantled without any damage. The warehouse which has been constructed by use of pre-engineered steel structural, one of the unique features of such construction is that the same can easily be and conveniently dismantled without any damage or deterioration and is capable of being re-erected at another site. Therefore, the warehouse constructed by the applicant does not fall within the purview of the immovable property and hence, the restriction imposed under section 17(5)(d) of the Act is not applicable in this case. 2.9 In support of the contention that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vable property things attached to the earth or permanently fastened to anything attached to the earth. The term attached to the earth has not been defined in the General Clauses Act, 1897. Section 3 of the Transfer of Property Act, however, gives the following meaning to the expression attached to the earth : (a) rooted in the earth, as in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls and buildings; (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached. 19. It is evident from the above that the expression attached to the earth has three distinct dimensions, viz. (a) rooted in the earth as in the case of trees and shrubs (b) imbedded in the earth as in the case of walls or buildings or (c) attached to what is imbedded for the permanent beneficial enjoyment of that to which it is attached. Attachment of the plant in question with the help of nuts and bolts to a foundation not more than 1= feet deep intended to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attache ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where restriction has been put forward by the Legislation for claiming eligibility for ITC has been described in Section 16(1) and the benefit of apportionment is subject to Section 17(1) and (2). While considering the provisions of Section 17(5)(d), the narrow construction of interpretation put forward by the Department is frustrating the very objective of the Act, inasmuch as the petitioner in that case has to pay huge amount without any basis. Further, the petitioner would have paid GST if it disposed of the property after the completion certificate is granted and in case the property is sold prior to completion certificate he would not be required to pay GST. But here he is retaining the property and is not using for his own purpose but he is letting out the property on which he is covered under the GST, but still he has to pay huge amount of GST, to which he is not liable. B...... if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay under Section 17(5)(d) of the CGST Act. 2.12 In view of above facts, the applicant submits that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax credit where inward supplies are received by a taxable person for construction of an immovable property on his own account meaning thereby input tax credit shall not be allowed in respect of inward supplies where such supplies are received to construct of an immovable property for own use by the taxable person. However, since the applicant has constructed the warehouse and let it out to another person against rent, it cannot be said that the applicant has received the inward supplies for construction of the warehouse on his own account. (ii) The aforesaid clause denies input tax credit in respect of an immovable property. However, the warehouse constructed by the applicant cannot be regarded as immovable property since the warehouse is constructed by use of pre-engineered steel structures to a foundation of civil structure which can be detached and dismantled without any damage and is capable of being re-erected at another site. In support of his contention, the applicant has placed his reliance upon the judgement delivered by the Hon ble Supreme Court in the case of CCE vs v. Solid Correct Engg. Works. (iii) The ratio of the judgement delivered by the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income in his books. In the instant case, admittedly the applicant has constructed the warehouse and has accounted for the same in his books of accounts and retains the ownership/ title of the said warehouse. Further, the said warehouse is being used by the applicant for providing outward supplies of warehousing service and/or renting or leasing service. We are therefore of the view that the warehouse has been constructed in the applicant s own account and the contention of the applicant in this regard is not acceptable. Further, the submission of the applicant that since the goods stored in the warehouse belong to another person who is occupying the premises on rent, is also not acceptable since the fact that the applicant is providing outward supplies of warehousing service and/or renting or leasing service on his own account cannot be denied. 4.7 We now proceed to decide whether the warehouse constructed by the applicant can be regared as an immovable property or not. The applicant contends that the warehouse is constructed by use of pre-engineered steel structures which can easily and conveniently be dismantled without any damage or deterioration and is capable of being re-e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greater importance to the object of annexation which is determined by the circumstances of each case. One of the important considerations is founded on the interest in the land wherein the person who caused the annexation possesses articles that may be removed without structural damage and even articles merely resting on their own weight are fixtures only if they are attached with the intention of permanently improving the premises. The Indian law has developed on similar lines and the mode of annexation and object of annexation have been applied as relevant tests in this country also. .. Para.-23 (relevant extract) : 23. The courts in this country have applied the test whether the annexation is with the object of permanent beneficial enjoyment of the land or building. .. What is evident from the observations mentioned in paras. 22 23 that the object or intention of annexation is the pertinent test to determine whether something is for permanent beneficial enjoyment . Further, para. 22 also implies that this would be determined on the basis of the circumstances of each case . In the instant case, it is not the case that the applicant and nor the intentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. We thus find that the aforesaid case is not identical with the case we are dealing with and therefore we are of the opinion that the ratio of the aforesaid judgment is not applicable to the present case, as it is distinguishable on the basis of facts. 4.10 It is also learnt that the department has filed an appeal before the Hon ble Supreme Court of India against the said judgment and the Hon ble Supreme Court has granted leave against impugned order on 18.04.2023. In this context, we like to reproduce the observation of the Uttar Pradesh Authority for Advance Ruling in the case of KRBL Infrastructure Ltd reported in [2022] 138 taxmann.com 93 . In para 17, learned Members have observed as follows: 17. We find that the applicant has placed reliance on the judgment of the Hon'ble High Court Orissa in the case of Safari Retreats (P.) Ltd. (supra). In the said case, 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. We find that the department has filed an appeal (SLP(C) No. 26696/2019) in against the said judgment of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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