In re Jabalpur Hotels Private Limited (GST AAAR Madhya Pradesh)
Whether Input credit on Purchase of Lift would be available to Hotel as it has been used in the course or for the furtherance of business?
As per the Section 17 (5) of CGST Act mentioned above, the Input tax credit shall not be available on the goods and 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.
The definition of immovable property is not provided under GST Act. According to section 3(26) of the General Clauses Act, 1882, “Immovable property shall include land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth”. According to section 3 of the Transfer of Property Act, 1882, “Immovable property does not include standing timber, growing crops or grass”.
In his submission appellant has argued that the impugned item ‘lift’ merits classification as ‘plant and machinery’ and since ‘plant and machinery’ is excluded from the term ‘immovable property’, for the purpose of 17(5) (d), again appellant has pleaded that the plant and machinery includes certain foundations and structures however certain structures and foundations are excluded from Plant and Machinery and these are, land, building or any other civil structures, telecommunication towers and pipelines laid outside the factory premises. The officer misinterpreted the above explanation and concluded that any plant or machinery attached to land, building or any other civil structures, telecommunication towers and pipelines laid outside the factory premises shall not be considered as plant and machinery. This is an incorrect interpretation of the explanation. The lift installed in the building for the purpose of furtherance of business cannot be deemed to be a part of the building or an immovable property just because of the fact that it was fastened in the civil structure of the building by way of nuts, bolts and fasteners. Further, the lift so installed in his Hotel is not a customized lift but a pre-designed lift. These lifts require a specified area in a building and can easily be installed by fastening nut and bolts and other fasteners in the building and no specific modification or alteration is required in the building structure. Thereafter these lifts can be disassembled without causing any structural damage to the building and reassembled on need and can be resold in open market. The arguments of appellant are same as raised before AAR. We do not find any new point here to consider.
The judicial citations relied upon by the appellant have been duly perused and considered by us. However, we find that all these cases pertain to pre-GST era and since Sec 17(5) of the CGST Act 2017 has put to rest all such issues in unambiguous terms; the legal citations adduced by appellant do not come to his rescue.
Lift purchase does not qualify as goods but is works contract resulting into an immovable property. High rise buildings’ sanctioned plan includes lifts or escalators as fixtures.
The appellant has not made any statement regarding capitalization of lift expenses.
In view of above, it is concluded that the ITC is not admissible on purchase of Lift as per the Section 17(5) (d) of CGST Act, 2017.
Read Also AAR: ITC on Lifts procured & installed in hotel building not eligible
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, MADHYA PRADESH
PROCEEDINGS
(Under section 101 of the Central Goods and Services Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017)
1. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017 are mirror image of each other except for certain specific provisions. Therefore, unless a specific mention is made to such dissimilar provisions, a reference to the CGST Act would mean a reference to the similar provisions under the MPGST Act and vice-versa. At places we may refer it as GST Act.
2. The present appeal has been filed under section 100 of the Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017 [hereinafter also referred to as “the CGST Act and MPGST Act”] by M/s. Jabalpur Hotels Private Limited (hereinafter also referred to as the “appellant”) against the order of Authority for Advance Ruling No. 10/2020 dated 08.06.2020
3. BRIEF DISCRIPTION
