The Telangana State Authority for Advance Ruling (TSAAR) has held that the inward supply made for the construction of a shed using Prefabricated Technology is not eligible for Input Tax Credit (ITC) since the same is categorised under Immovable Property.
The application was filed before the Authority for Advance Ruling (AAR) by M/s. Sanghi Enterprises for clarification regarding the eligibility of ITC for the construction of a shed using prefabricated technology.
The applicant claimed that the shed is a movable property as it can be dismantled and restructured at another location without damage.
The authority noted that Section 17(5)(d) of the Central Goods and Services Tax Act,2017 restricts ITC on goods or services received for the construction of an immovable property.
The authority also clarified that the term “construction” includes reconstruction, renovation, additions, alterations, or repairs to the extent of capitalization.
The authority noted that the case of Solid & Correct Engineering Works, where the Supreme Court considered even a temporary shelter as immovable property if it is for the beneficial enjoyment of the land to which it is attached, is applicable in this case.
The authority comprising of Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) and Sri Sahil Inamdar, Additional Commissioner (Central Tax) concluded that the warehouse constructed using prefabricated structures constitutes immovable property and is not eligible for ITC under Section 17(5)(d) of the Central Goods and Services Tax Act, 2017. In result, the AAR ruled that ITC is not allowed for the construction of a shed using pre-fabricated technology.
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