Central Air Conditioning Plant, Lift, Electrical Fittings, and Fire Safety Extinguishers are Immovable Property, ineligible for ITC: AAAR

The Gujarat Appellate Authority for Advance Ruling (AAAR) observed that central air conditioning plant, lift, electrical fittings, and fire safety extinguishers are immovable property and are ineligible for input tax credit (ITC).

M/s. The Varachha Co-Op. Bank Ltd., the appellant, 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).

The appellant had entered into a contract for ‘supply & erection’ of ‘Central Air Conditioning System’. Section 2(119) of the CGST Act, defines ‘Works Contract’. The expression ‘works contract’ is limited to contracts to do with immovable property, which is defined in clause 3(26) of the General Clauses Act. 1897. Section 3 of the Transfer of Property Act 1882, further defines the phrase ‘attached to earth’.

The lift as per the appellant, will be saleable if somebody wants to purchase it could he dismantled and sold. Thus, it would not be prudent to hold the lilt. assembled and erected at the premises, to be an immovable property.

The appellant will install ‘Electrical Fittings’ 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 under Section 17(5) of the CGST Act. However, for rest of the ‘Electrical Fittings’. there is no specific barring provisions.

The applicant contended that Fire Safety Extinguishers is nothing but ‘Plant and Machinery attached to earth which is movable as well as marketable also. The restriction provided under section 17(5)(c ) & (d) of the CGST Act does not apply to procurement of various inputs which arc installed in their administrative building hence ITC should be available to the appellant on these goods.

A Two-Member Bench of the Authority comprising Samir Vakil, Member SGST and BV Siva Naga Kumari, Member CGST concluded that items such as Central Air Conditioning Plant, Lift, Electrical Fittings, and Fire Safety Extinguishers were classified as immovable property, rendering them ineligible for ITC.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates