In re Las Palmas Co-Op. Housing Society (GST AAAR Maharashtra)
The Maharashtra Appellate Authority for Advance Ruling while upholding the ruling given by the Maharastra Advance Ruling Authority held that the Appellant will not be eligible to avail the ITC in respect of the lift installation charges paid to the lift contractor, in terms of section 16(2)(b) read with section 17(5)(c) and 17(5)(d) of the CGST Act, 2017.
ITC would be available on tax paid on works contract services when such services are an input service for further supply of works contract service. The appellant does not fulfill the conditions laid down above. It has to be understood that the exception carved out to provide ITC in the case of tax paid on works contract is for those who in turn provide works contract service. For eg when a principal gets a contract of work executed from a sub-contractor and provides the same to the employer. In such a case, the principal becomes eligible for ITC even though the contract results in immoveable property. However, the situation is far from it in the present case. Firstly, the society itself is not a works contract service provider. Nor is it in the business of providing works contract services. It has not itself provided any works contract service to the members. If the society is not itself a provider of the service there is no question of any ITC on input service. The works contract service is received by the society for the common benefit of the members. Therefore, we do not agree with the contention of the appellant that they are covered by the exception provided in Section 17 (5) (c) of the CGST Act.
As regards, the Circular No. 109/28/2019-CIST, dated 22.07.2019 ,issued by the CB1C as referred to by the Appellant to contend that the Circular does not disallow the ITC in respect of goods, which become immovable property after being installed, and hence they are rightfully eligible to avail ITC in respect of the lift installation charges paid to the lift contractor, even if the lift is considered as immovable property, as held by the Maharashtra Advance Ruling Authority. In this regard, we are of the view that the said Circular allows the ITC in respect of GST paid on Capital Goods only, and not on the works contract services. It is not in dispute that the Appellant is availing the works contact services from the lift contractor for the replacement of the lift in the Society, which after being installed, becomes immovable property, and therefore ITC in respect of GST paid on such works contract services would not be admissible to the Appellant.
We do not find any reason to interfere with the ruling passed by the Maharashtra Advance Ruling Authority vide their Order No. GST-ARA-31/2019-20/B-13, dated 22.01.2020. Accordingly, it is held that the Appellant will not be eligible to avail the ITC in respect of the GST paid on lift installation charges paid to the lift contractor, in terms of section 16(2)(b) read with section 17(5)(c) and 17(5)(d) of the CGST Act, 2017. Consequently, the Appeal filed by the Appellant is not maintainable and liable to be rejected and we order accordingly.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, MAHARASHTRA
(Proceedings under Section 101 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST Act.
2. The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act. 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/s. Las Palmas Co-Op. Mousing Society, 20. Little Gibbs Road, Malabar Hill. Mumbai – 400006 (herein after referred to as “the Appellant”) against the Advance Ruling No. GST-ARA-31/2019-20/B-13, dated 22.01.2020, pronounced by the Maharashtra Authority for Advance Ruling (MAAR).
BRIEF FACTS OF THE CASE
3.1 M/s. Las Palmas Co-operative Housing Society Limited situated at 20, Little Gibbs Road. Malabar Hill, Mumbai – 400006 is a Co-operative Housing Society registered under the Maharashtra Co-operative Housing Society Act vide Registration BOM/HSG–446 of 1963 dated 06th July, 1963.
3.2 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 input tax credit under the GST Registration No. 27AAABL0207A1ZG.
3.3 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 (hereinafter referred to as “Fujitec” or “lift contractor” interchangeably). 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.
3.4 The Appellant wanted to know about the eligibility of Input Tax Credit on the lift Installation Charges paid to Fujitec. Therefore, the Appellant filed an application dated 25.07.2019 before the Maharashtra Advance Ruling Authority (MAAR). on the following issues:
whether the Applicant/Appellant is eligible for the input tax credit 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.
3.5 To support their arguments, the Applicant/ Appellant had relied upon the provisions laid down under section 16(1) of the CGST Act, 2017, pertaining to the eligibility’ of the ITC. They also relied upon the definition of works contract services provided under Section 2(119) of the CGST Act, 2017. They further relied upon exclusion clause of Section 17 (5)(d) of the CGST Act, 2017 to argue that the lift being in the nature of the “Plant and Machinery” would be outside the purview of the blocked credit provided nature of the “Plant and Machinery” would be outside the purview of the blocked credit provided under section 17(5) of the CGST Act. 2017. To buttress their argument, they relied upon the definition of the “lift” and “appliance”, as per P Ramanatha Aiyar’s Advanced Law Lexicon, and meaning of the “Plant and Machinery” provided under the explanation to Section 17(5) of the CGST Act. 2017.
3.6 The aforesaid application filed by the Appellant has been decided by the Maharashtra Authority of advance ruling vide their Order bearing No. GST-ARA-31/2019-20/B-13, dated 22.01.2020, wherein it has been held that the Appellant was not entitled for the input tax credit of replacement of lift, attributing to the fact that the lift, when erected, installed, and commissioned in a building, would be construed as an integral part of the building, and hence the same will be treated as immovable property. The Authority have relied upon the Hon’ble Supreme Court Judgment in the case of Triveni Engineering Industries Ltd. Vs. C.C.E., 2000 (40) RLT l(SC)-2000 (120) E.L.T. 273, to arrive at the aforesaid conclusion. Once, it has been held by the Advance Ruling Authority that the erection, commissioning and installation of the lifts under question is immovable property, they went on to decide that the input tax credit in respect of the charges paid to the lift contractor were not admissible to the Appellant in terms of section 17(5)(d) of the CGST Act. 2017, which is being reproduced herein under:
(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 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 soods 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. “
4. Being aggrieved by the aforesaid advance ruling order, the Appellant have filed the present appeal.
GROUNDS OF APPEAL
5. The Appellant in their Appeal have, inter alia, mentioned the following grounds of appeal:
5.1 that they are providing the same services as received from the lift contractor without adding or altering those services, to the members of the society. That is, they are receiving the works contract services from the lift contractor, i.e. Fujitech and rendering those services to the members of the society, without adding or altering those services, which remained in the nature of works contract services. They have further emphasized that works contract services, being rendered by the lift contractor was not disputed by the Advance Ruling Authority either in the impugned ruling. Hence, they are eligible to avail the ITC on the input services of works contract received from the lift contractor in terms of Section 17(5)(c) of the COST Act, 2017. as they are acting as the suppler of the works contract services to the members of the society, from whom they are recovering this lift installation charges along with the GST thereon at the rate of 18%. Section 17(5)(c) of the CGST Act, 2017, is being reproduced herein under:
Section 17. Apportionment of credit and blocked credits
(1)…………………..
(2)…………………..
…………………..
(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;
In view of the above provision, the Appellant have submitted that if works contract services have been availed for providing works contract services, credit is available to them.
5.2 Second contention put forth by the Appellant is that Lift is covered under the head “Plant and Machinery”, which has been excluded from the provisions related to the blocked credit, prescribed under section 17(5)(c) and 17(5 )(d) of the CGST Act, 2017. Therefore, they are eligible to take the ITC paid on the input services, received from the Lift contractor.
‘Section 17. Apportionment of credit and blocked credits
(1) ………………………..
(2) ………………………..
(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely: –
………………………..
………………………..
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant and 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 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 floods or services or both and includes such foundation and structural supports but excludes-
(i) land, building or any other civil structures;
(ii) telecommunication lowers; and
(iii) pipelines laid outside the factory premises. “
5.3 Relying on the above provision, the Appellant, inter alia, have contended that the plant and machinery, used in the above explanation, is wide term and cannot be construed in narrow sense as the primary objective of the GST itself was to remove the cascading effect of the taxes and therefore, overall objective of the GST legislation should be taken into consideration.
