The Hon’ble AAAR, Maharashtra in Re: M/s Las Palmas Co-operative Housing Society [Order No. MAH/AAAR/RS-SK/24/2020-21 dated July 20, 2020] held that the input tax credit (ITC) in respect of GST paid on lift installation charges paid to lift contractor shall not be available in terms of Section 16(2)(b) read with Section 17(5)(c) and 17(5)(d) of the Central Goods and Services Tax Act, 2017 (CGST Act).
M/s Las Palmas Co-operative Housing Society (“the Appellant”) is recovering amount, from each of the society members under various heads such as Service Charges, Electricity Charges, Lift Charges, Ground Rent, Sinking Fund, Repair Fund, Water Charges, Parking Charges, etc., and paying 18% GST on it after availing the ITC.
The Appellant is under the process of replacing existing lift of the society for which Contract has been awarded to M/s. Fujitec India Private Limited (“Fujitec” or “lift contractor”). The Appellant is also recovering separate amount for replacement of lifts from the members (apart from the normal charges as stated above) as “contribution for installation of new lifts” and charging 18% GST on it to the members of the society. The Appellant is recovering such amount of contribution for the installation of the new lifts under the separate tax invoice.
The Hon’ble AAR Maharashtra in Order bearing No. GST-ARA-31/2019-20/B-13 dated January 22, 2020, held that the Appellant was not entitled for the ITC of replacement of lift, as lift when erected and installed in a building would be construed as an integral part of the building and hence forms part of immovable property.
Being aggrieved, the Appellant filed an appeal before the Hon’ble AAAR, Maharashtra.
Whether the Appellant is eligible for the ITC of lift installation charges paid to Fujitec, if it is booked as capital expenditure in their books without availing the depreciation on 18% GST charged by Fujitec?
The Hon’ble AAAR, Maharashtra in Order No. MAH/AAAR/RS-SK/24/2020-21 dated July 20, 2020 held as under:
It may be noted that the Hon’ble AAAR, Karnataka in Re: Tarun Realtors Pvt. Ltd. [Order No. KAR/AAAR-14/2019-20 dated February 6, 2020] has also denied credit on various facilities installed in the commercial mall construing the same as ‘civil structure’. Similarly, the Hon’ble AAR, Madhya Pradesh in Re: Jabalpur Hotels Private Limited [Order No. 10/2020 dated June 8, 2020] denied ITC on ‘lifts’ installed in Hotel Building.
Further, it is to be noted that as per Circular No. 109/28/2019-GST dated July 22, 2019, ITC is allowed to a Residential Welfare Association (RWA) in respect of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services. Relevant portion of the Circular is reproduced below:
“3. Is the RWA entitled to take input tax credit of GST paid on input and services used by it for making supplies to its members and use such ITC for discharge of GST liability on such supplies where the amount charged for such supplies is more than ₹ 7,500/- per month per member?
RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.”
Section 16(2)(b) of the CGST Act
“16. Eligibility and conditions for taking input tax credit.
2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
(b) he has received the goods or services or both.
Explanation.-For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.”
Section 17(5)(c) and 17(5)(d) of the CGST Act
“17. Apportionment of credit and blocked credits.
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
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 VI, 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.”
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