TMI Blog2023 (10) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... service. The lift would become an immovable property after being erected and installed, as it is attached to the building itself - As the erection, installation and commissioning of lift via a works contract service as pointed out above, makes it an immovable property, it ceases to be a plant and machinery. Thus, in terms of section 17 of the CGST Act, the appellant is not entitled to ITC of GST paid on supply of Lift/Elevator. Electrical fittings such as Cables, Switches, NCB and other Electrical consumables materials - HELD THAT:- The electrical fittings are mostly concealed into the wall/floor of the building. They are concealed or fitted on to the building through pipes as it serves the dual purpose of safety and aesthetics. The supply of electrical fittings involves its installation also, The supply therefore falls under the category of Works Contract Service , further on installation of the electrical fittings it becomes part of the building and thereby an immovable property - the supply of electrical fittings after installation and commissioning becomes part of the building i.e. immovable property and thus in terms of section 17 of the CGST Act, the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act, 2017 and the GGST Act, 2017 ) are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the GGST Act, 2017. 2. The present appeal has been filed under Section 100 of the CGST Act, 2017 and the GGST Act, 2017 by M/s The Varachha Co-op. Bank Ltd., against the Advance Ruling No. GUJ/GAAR/R/37/2021 dated 30.07.2021. 3. Briefly the facts are enumerated below for ease of understanding. 4. M/s. The Varachha Co-Op. Bank Ltd., I to 10, Affil Tower, L.H. Road, Surat-395006, Gujrat (hereinafter referred to as the appellant ), holding GSTIN: 24AABAT4356N1Z6, submitted that they are constructing a new administrative building and incurring cost on various services. The appellant, further submitted that they were eligible for Input Tax Credit [ITC] on the below mentioned goods and services in view of the foregoing viz: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for the ITC of following:- i) Central Air Conditioning Plant (Classified Grouped under Plant Machinery ) ii) New Locker Cabinet (Classified Grouped under Locker Cabinets ) iii) Lift (Classified Grouped under Plant Machinery ) iv) Electrical Fittings, such as Cables, Switches, NCB and other Electrical Consumables Materials (Classified Grouped under Separate Block namely Electrical Fittings ) v) Roof Solar (Classified Grouped under Plant Machinery ) vi) Generator (Classified Grouped under Plant Machinery ) vii) Fire Safety Extinguishers (Classified Grouped under Plant Machinery ) viii) Architect Service Fees (Charged to Profit Loss Account) ix) Interior Designing Fees (Charged to Profit Loss Account) 6. The GAAR, vide its order No. GUJ/GAAR/R/37/2021 dated 30.07.2021 , gave its ruling as under:- i) Input Tax Credit is admissible on New Locker Cabinet and Generator; ii) Input Tax Credit is blocked under Section 17(5)(c) CGST Act for Central; Air Conditioning Plant, Lift, Electrical Fittings, Fire Safety Extinguishers, Roof Solar Plant; iii) Input Tax Credit is blocked under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs both at the exterior and the interior. The appellant does not intend to avail ITC on Electrical Fittings used in civil construction as it is being blocked via section 17(5). However, for rest of the Electrical Fittings , there is no specific barring provisions. The appellant also wishes to rely on the ruling of M/s. Nipro India Corporation P. Ltd.. [2018(18) GSTL 289 (AAR-GST)]. Roof Solar Plant The solar equipment can be qualified as Plant and Machinery will be used for furtherance of business i.e. in its business of supplying taxable service, Even though generation of electricity is an exempt supply, the appellant will be using electricity solely consuming it captively for the purpose of supplying taxable services. From the above it is inferred that the Roof Solar Pant will be attached to earth for operational efficiency. The whole purpose behind attaching it to a concrete base will be to secure maximum operational efficiency and for safety purpose. Further, it is also seen that the roof solar plant is saleable and that if somebody wants to purchase, it can be dismantled and sold. Further, it would not be correct to hold that the Roof Solar Plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article in support of their contentions: a) Order No. 19/ARA/2021 dated 18.06.2021 passed by the Authority for Advance Ruling, Tamilnadu in the case of M/s. KLF Nirmal Industries P. Ltd. b) Order No. KAR ADRG 25/2019 dated 12.09.2019 passed by the Authority for Advance Ruling, Karnataka in the case of M/s. Shri Keshav Cement and Infra Limited. e) Article from the portal TaxGuru with reference to order dated 13.09.2021 passed by Authority for Advance Ruling, Rajasthan in the case of M/s. Pristine Industries Ltd Discussions and Findings: 9. We have gone through the facts of the case as mentioned in the Appeal papers, the Ruling of the GAAR, documents on record and oral as well as all the written submissions made by the appellant. 10. We find that the appellant had sought ruling on the questions mentioned in para 5 above which was decided vide the impugned order dated 30.7.2021. 11. As is already mentioned, the GAAR allowed ITC on New Locker Cabinet and Generator. However, it held that ITC is blocked under Section 17(5)(c) of the CGST Act, 2017 for Central Air Conditioning Plant; Lift; Electrical Fittings; Fire Safety Extinguishers and Roof Solar P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; Explanation .- For the purposes of this Chapter and Chapter Vl. 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. 13. Immovable property is not defined under GST. However, its defined under section 3(26) of the General Clauses Act, 1897 to include land, benefits to arising out of land and things attached to the earth, or permanently fastened to anything attached to the earth. Likewise, section 3(36) of General Clauses Act, 1897, defines movable property to mean property of every description, except immovable property, further, section 3 of the Transfer of Property Act, 1882 stipulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e system can be divided into three parts. i) Plant room, which includes compressor, condenser and motor ii) Air handling unit (AHU room) iii) Air distribution system (Ducting) 15.4 The plant room is located away from the room to be air conditioned. Other components are grouped together in a AHU and conditioned air is circulated through air distribution system i.e. ducting with the help of fan or blower to the room to be air-conditioned. The air, which is to be conditioned, is directly allowed to flow over the evaporator coil. Low pressure and temperature refrigerant passing through evaporator coil absorbs heal from the air. Thus the air gets cooled. 15.5 The appellant has not submitted the details of supply of Central Air Conditioning Plant, its installation and functioning. However, from the general details of installation and functioning of a central air conditioning plant mentioned above, we find that the contention of the appellant that the supply does not involve assimilation with the property and the work carried out by the supplier is only towards making the plant ready for a wobble free operation is not true representation of facts. As is evident the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is court in Virdi Brothers (supra), which applies to the case in hand with full force. [emphasis supplied] 15.6 As the construction of central air conditioning plant via a works contract service as pointed out above, makes it an immovable properly, it ceases to be a plant and machinery. 15.7 In view of the foregoing, we hold that the ITC on the supply of Central Air Conditioning Plant, ceases to be a plant and machinery hence, is blocked under Section 17(5)(c) of CGST Act, 2017 as the same is works contract services for construction of an immovable properly. 16. Lift 16.1 The appellant has entered into an agreement with M/s. Schindler India Private Ltd., for supply and installation of Lift/Elevator. The components of a lift include - the elevator car, elevator doors, hoist way or shaft, elevator control system, safety systems, counterweights, guide rails, call buttons, emergency communication system, lighting, and ventilation. In the agreement for supply, M/s. Schindler India Private Ltd., had mentioned the following installation steps viz:- i) Installing of hoisting equipment and testing hitch point ii) Template fixing iii) Installing of mecha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior and interior and further concedes that they do not intend to avail ITC on Electric Fittings used in civil construction. However, for the rest of the Electrical Fittings , they intend to avail ITC on the premise that there is no specific barring provisions. 17.2 The electrical fittings are mostly concealed into the wall/floor of the building. They are concealed or fitted on to the building through pipes as it serves the dual purpose of safety and aesthetics. The supply of electrical fittings involves its installation also, The supply therefore falls under the category of Works Contract Service , further on installation of the electrical fittings it becomes part of the building and thereby an immovable property. 17.3 In view of the foregoing, we find that the supply of electrical fittings after installation and commissioning becomes part of the building i.e. immovable property and thus in terms of section 17 of the CGST Act, we hold that the appellant is not entitled to ITC of GST paid on Electrical fittings. 18. Roof Solar Plant 18.1 As per the appellant they will be installing a Roof Solar Plant atop their building to generate electricity which will ultimately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 18. Thus, it can be inferred that Fire Safely Extinguishers are integral part of any building. A building is only complete and can be occupied only when Fire Safely Extinguishers arc in place. Fire Safety Extinguishers however are permanently attached to the building and are in place during the entire life lime of the building. 19.2 The Hon ble Supreme Court of India in the case of Commissioner of Central Excise, Ahmedabad Vs. Solid Correct Engineering Works [2010 (252) E.L.T. 481 (S.C.)] held at Para 33 as under: 33. It is noteworthy that in none of the cases relied upon by the assessee referred to above was there any element of installation of the machine for a given period of time as is the position in the instant case. The machines in question were by their very nature intended to be fixed permanently to the structures which were embedded in the earth. The structures were also custom made for the fixing of such machines without which the same could not become functional. The machines thus becoming a part and parcel of the structures in which they were fitted were no longer moveable goods. It was in those peculiar circumstances that the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the location and condition necessary for it to be capable of operating in the manner intended by management. (c) the initial estimate of the costs of dismantling, removing the item and restoring the site on which it is located, referred to as decommissioning, restoration and similar liabilities , the obligation for which an enterprise incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period. 18. Examples of directly attributable costs are: (a) costs of employee bene fits (as defined in AS 15, Employee Benefits) arising directly from the construction or acquisition of the item of property, plant and equipment: (b) costs of site preparation: (c) initial delivery and handling costs; (d) installation and assembly costs; (e) costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling any items produced while bringing the asset to that location and condition (such as samples produced when testing equipment): and (f) professional fees. 20.4 As is evident, AS 10, prescribes ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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