In re Tianyin Worldtech India Private Limited (GST AAR Uttar Pradesh)
Q-1 The Applicant has approached the authority of Advance ruling to determine the admissibility of input Tax Credit of Tax paid on cost proposed to be incurred in relation to Activity mentioned ?
Ans-1 The input Tax Credit of Tax paid on cost Proposed to be incurred in relation to Activity mentioned is not Admissible.
When the goods or services are bought for construction of immovable property which will be used in the course of business, the GST paid on such good or service is also not eligible- to be claimed as Input tax credit if the immoveable property is constructed for own purpose, as the owner will become the end user and he cannot avail ITC of cost incurred on construction goods, as there is a break in the tax chain.
We find that the applicant had submitted details of nature, function, use, utility of different items on which admissibility of input tax credit has been sought. We proceed to examine one by one.
The first Major head mentioned at Sl. No. 1 is Building Work wherein ITC availability on (1) Cement, iron, dust, sand, bricks, bonding chemicals, concrete used in building for construction and repairing of production floors (2) labour contractor payment (used in making of production area) (3) Painting of building (4) False sealing and lights (5) Wire Fitting on Production Floor (6) Furniture & Fixture for Production Floor (7) Furniture & Fixture for office and (8) Tiles used in production area have been sought by the applicant. According to the provisions of Sec. 17(5) read with the explanation to it, credit of civil structure is covered under blocked credit. Clause (c) and (d) of section 17(5) restricts ITC in respect of works Contract services and goods or services used towards construction of immovable property As such, input tax credit (ITC) of GST paid in relation to building or any other civil structure is not available.
The next Major head mentioned at SI. No. 2 is Electrical Work wherein ITC availability on Sub-Station Work, DG Set Power Supply System, Lighting System Work, Emergency and Exit Light Fixtures, Telephone System, LAN System, Fire Alarm System and Dismantling Work have been sought by the applicant. In Form GST ARA-01, the applicant has submitted that they shall make new construction. During construction of factory building, Electrical Work would form part of building. Electrical items and fittings after installation becomes a part and parcel of immovable property and consequently attract the provisions of Section 17(5)(c ) and 17(5)(d) of CGST Act, 2017. Therefore, the input tax credit on piece of activity/material mentioned under Electrical Work Head is not admissible in our view.
The next Major head mentioned at Si. No. 3 is Air Condition Work wherein ITC availability on Air-Conditioning Equipment, Air-Conditioning Piping work & Accessories, Ventilation Fans, Air-Distribution System, Automatic Control System and Dismantling Work have been sought by the applicant. During construction of factory building, Air Condition Work would form part of building. Air conditioning equipments after installation becomes a part and parcel of immovable property and consequently attract the provisions of Section 17(5)(c ) and 17(5)(d) of CGST Act, 2017. In our view, the input tax credit on piece of activity/material mentioned under Air Condition Work is not admissible.
The next Major head mentioned at Sl. No. 4 is Fire Protection Work wherein ITC availability on Internal Fire Hydrant System, Sprinkler Work, Extinguisher, Fire Documentation and Dismantling Work have been sought by the applicant. The said items are not apparatus, equipment, and machinery fixed to earth by foundation or structural support. As such, in our view, the input tax credit of the aforesaid items mentioned under Fire Protection Work is not admissible as it does not fall under the definition of Plant & Machinery as given in Explanation to Section 17 of the CGST Act, 2017.
The next Major head mentioned at Sl. No. 5 is Mechanical Work wherein ITC availability on Plumbing (Internal and Domestic water distribution supply System), External Sewage System, Internal Sewer and venting system, Gardening water supply system, Sanitary Ware and CP Fitting and Dismantling Work have been sought by the applicant. The Plumbing, External & Internal Sewage system and sanitary fittings are integral parts of building or any other civil structure. Therefore, the ITC of GST paid on such Plumbing, External & Internal Sewage system and sanitary fittings is not available. The ITC on Gardening Water supply system is not admissible as not used in course or furtherance of business and as per restrictions in Section 17(5) of the CGST Act, 2017.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, UTTAR PRADESH
1. M/s TIANYIN WORLDTECH INDIA PRIVATE LIMITED, D-225, GF&FF, Sector-63, Noida -201301 (here in after referred to as the applicant) is a registered assessee under GST having GSTN: 09AAFCT4154Q1ZO.
2. The applicant has sought advance ruling on following question-
(1) The Applicant has approached the authority of advance ruling to determine the admissibility of Input Tax Credit of Tax paid on cost proposed to be incurred in relation to activity mentioned in Annexure attached with the application.
3. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.
4. As per statement of facts submitted by the applicant-
(i) The Applicant is engaged in the manufacturing of Charger of Mobile Phone & its Parts or Sub-Parts.
(ii) The Applicant has purchased an old Factory situated at B-204, Phase-II, Noida for Expansion their business and in said factory applicant shall also make new construction to setup plant and machinery.
(iii) The Applicant will use aforesaid factory for Manufacturing & other related
(iv) The list of activities and nature of cost proposed to be undertaken/incurred under the above said property are provided as under:
