2020(01)LCX0162(AAR)
AAR-MAHARASHTRA
M/S Las palmas co-operative housing society ltd
decided on 22/01/2020
MAHARASHTRA AUTHORITY FOR
ADVANCE RULING
(Constituted under section 96 of the Maharashtra Goods and Services
Tax Act, 2017)
BEFORE THE BENCH OF
(1) Smt. P Vinitha Sekhar Addl. Commissioner of
Central Tax, (Member)
(2) Shri. A. A. Chahure Joint Commissioner of State Tax,( Member)
GSTIN Number, if any/ User-id | ||
Legal Name of Applicant | M/S. Las palmas co-operative housing society ltd. | |
Registered Address/Address provided while obtaining user id | ||
Application | ||
Jurisdictional officer | ||
Nature of activity(s) (proposed / present) in respect of which advance ruling sought | ||
A | Category | |
B | Description (in brief) | |
Issue/s on which advance ruling required | ||
Question (s) on which advance ruling is required |
PROCEEDINGS
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
No.- GST-ARA-31/2019-20/B-13
Dated 22/01/2020
The present application has been
filed under Section 97 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-OPERATIVE HOUSING SOCIETY LIMITED,
the applicant, seeking an advance ruling in respect of the following questions.
1. Whether the Applicant - a Co-operative Housing Society paying Goods and
Services Tax (GST) on Maintenance Charges collected from its Members, shall be
entitled to claim Input Tax Credit of GST paid on replacement of existing lift/
elevator at its own premises to the vendor registered under the Goods and
Services Tax Act for manufacture, supply, installation and commissioning of
lift/ elevator?; and
2. Whether the Input Tax credit, if available; is not covered under blocked
credits under the Goods and Services Tax Act?
At the outset, we would like to make it clear that the provisions of both the
CGST Act and MGST Act are the same except for certain provisions. Therefore,
unless a mention is specifically made to any dissimilar provisions, a reference
to the CGST Act would also mean a reference to the same provision under the MGST
Act. Further to the earlier, henceforth for the purposes of this Advance Ruling,
a reference to GST Act¯ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION - AS PER THE APPLICANT
The submissions of the applicant made is as under:-
2.1. Applicant, a Co-operative Housing Society registered under the Maharashtra
Co-operative Housing Society Act, provides various services to its Residents for
which members are charged Maintenance charges under various Heads like - Service
Charges, Electricity Charges, Lift Charges, Insurance, etc. The Applicant
Society charges GST on such Maintenance Bills as applicable.
2.2. Applicant has proposed to replace the existing LIFT along with its
supporting structures.
2.3. Applicants query is whether they shall be entitled to claim Input Tax
Credit (ITC) of GST paid, on replacement of existing lift/ elevator, to the
vendor registered under the GST Act for manufacture, supply, installation and
commissioning of lift/ elevator?
2.4. Applicant has reproduced the provisions of Section 16 (I) of the CGST Act,
pertaining to eligibility and conditions for taking ITC. They have also
reproduced the relevant portion of the definition of a works contract¯ as
mentioned in Sec. 2 (119) of the CGST Act, 2017, defines works contract¯. They
have stated that Sch. II of the CGST Act, 2017 describes works contract¯ as
defined in clause (119) of Section 2 as a Composite supply which shall be
treated as supply of services under the Act. They have further reproduced
Section 17 of the CGST Act, 2017 which provides for Apportionment of credit and
blocked credits.
2.5. They have reproduced the definition of a Lift and Appliance as per P Ramanatha Aiyars Advanced Law Lexicon; 4th Edition and in view of the above
Legal provisions, explanation as per the GST Act and meanings covered under
Advanced Law Lexicon, the Applicant is of the view that -
- Manufacture, Supply, Installation and Commissioning of Lifts/ Elevators is in
the nature of Works Contract activity which is covered under the category of services under the GST Act;
- the Lift is an equipment¯ which shall be fixed to earth by foundation and
structural support and used for making outward supply of services to its
members;
- equipment¯ is plant and machinery¯ as per the Explanation mentioned in
Section 17 of the Goods and Services Tax Act, 2017;
- Plant and Machinery is not covered under the blocked list of ITC u/s. 17; and
- Therefore Applicant is entitled to claim ITC as per the provisions of the
Goods and Services Tax Law.
03. CONTENTION - AS PER THE JURISDICTIONAL OFFICER
The jurisdictional office has made written submissions as under:-
Details of benefit of notification of Service Tax if any availed:- As per Sr.
No. 28(c) of Notification No. 25n012 - S.T. 28.
Service by an unincorporated body or a non-profit entity registered under any
law for the time being in force, to its own members by way of reimbursement of
charges or share of contribution
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy
of service tax;
or
(c) up to an amount of five thousand rupees per month per member for sourcing of
goods or services from a third person for the common use of its members in a
housing society or a residential complex.
04. HEARING
Preliminary hearing in the matter was held on 20.1 1.2019. Mr. Manish Goel,
C.A., appeared and requested for admission of their application. Jurisdictional
Officer Ranjit Verma, Superintendent, Division - X, Range - III, Mumbai South
Commissionerate also appeared. The application was admitted and called for final
hearing on 12.12.2019. Mr. Manish Goel, C.A., appeared and made oral and written
submissions. The Authorised Representative was asked to submit the copy of
contract and related documents. Jurisdictional Officer Ranjit Verma,
Superintendent, Division - X, Range -III, Mumbai South Commissionerate appeared,
and made written submissions. Mr. Manish Goel, C.A. appeared on 02.01.2020 and
submitted copy of contract and invoices.
05. OBSERVATIONS
5.1 We have gone through the facts of the case, documents on record and
submissions made by both, the applicant as well as the jurisdictional office.
5.2 Applicant plans to replace the existing LIFT/ELEVATOR in their society
building, along with its supporting structures. Their query is whether they will
be entitled to claim Input Tax Credit of GST paid on replacement of existing
lift/ elevator to the vendor registered under the GST Act for manufacture,
supply, installation and commissioning of lift/ elevator.
5.3 In order to replace the existing lift/elevator, the society may have go in
for erection and installation of lift in their building, probably on the basis
of a lump sum contract price. The contracts entered into by the applicant with
the contractor, in such a case will be considered as indivisible works contracts
which will involve high technical skill, knowledge and experience of mechanical
and electrical as well civil engineering including preparation of designs,
drawings and compliance with engineering specifications and knowledge of lift
codes, standards and safety requirements and other regulations prescribed by the
Government and other authorities in this behalf. The erection of lift can be
done only inside the building structure as an integral part of the building in
which the lift is to be installed. The erection of a lift has, to be correlated
with and tailored, to meet the needs and requirements of a particular building.
Once the lift is installed and commissioned in the building, it becomes integral
part of the immovable property i.e. the building. The lift when installed in the
building makes the building fit for occupation and becomes a permanent fixture
of the building itself. Hence the same will be considered as an immovable
property. The Authorized Representative was asked to submit the copy of contract
and related documents during the course of the hearing held on 12.12.2019. On
02.01.2020, the applicant submitted a copy of Invoice No. 9-LIFT/2019-20 on a
Flat Owner showing a contribution of Rs. 51,445/-, plus GST thereon towards
installation of a new lift. They have also submitted a copy of Circular No.
109/28/209-GST dated 22.07.2019 which contains clarifications pertaining to
issues related to GST on monthly subscription/contribution charged by a Resident
Welfare Association from its members. However the applicant has not submitted
any copy of contract in respect of erection and installation of lift in their
building.
5.4 The Honble Apex Court in the case of Triveni Engg. Industries Ltd. v. C.C.E.,
2000 (40) RLT 1 (SC) - 2000 (120) ELT 273, clearly laid down that after
assembling, on completion of process of erection, the item becomes a part of the
building or an immovable property. In the case of Quality Steel Tubes (P) Ltd.
v. C.C.E.. U.P., it was held by the Apex Court that Erection and maintenance of
the lifts forms part of the immovable property.
In the case of Otis Elevator Company (India) vs Superintendent of Central Excise
on 27 August, 2002, the Mumbai High Court Bench consisting of Justices V Daga
and J Devadhar Equivalent citations: 2003 (151) ELT 499 Bom, observed that :
9. Having heard the rival contentions and having examined all the citations
referred to hereinabove, we are clearly of the opinion that the same shall apply
to the facts of this case in full force and item in question being immovable
property cannot be subjected to excise under the tariff heading claimed by the
Revenue. The case sought to be made out by the petitioner is also covered by the
decision of the Government of India in reference, Otis Elevator Company (India)
Ltd., 1981 (3) ELT 720 (GOI), wherein it was clearly held that if an article
does not come into existence until it is fully erected or installed, adjusted,
tested and commissioned in a building, and on complete erection and installation
of such article when it becomes part of immovable property,¦¦¦..¯
5.5 In view of the above we have no doubt that the lift would become an
immovable property after being erected and installed, as it is attached to the
building itself.
5.6 Section 16 of the CGST Act, 2017 provides for Eligibility and conditions for
taking Input Tax Credit. As per Section 16 (1) Every registered person shall,
subject to such conditions and restrictions as may he prescribed and in the
manner specified in Section 49, be entitled to take credit or input tax harped
on any supply of goods or services or both to him which are used or intended to
be used in the course or furtherance or his business.......¯
5.7 Section 17 of the CGST Act, 2017 provides for Apportionment of credit and
blocked credits and Section 17 (5) (d) is reproduced as under:-
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 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.
The Explanation to Section 17 states that - 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) PipeIines laid outside the factory premises.¯
Explanation to Section 17(5) is very clear. ITC is available for plant and
machinery¯. 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 - Land, building or any other civil structures.
5.8 The lift, after erection and installation is an immovable property because
it becomes a part of an immovable property i.e a building. In other words it is
to be considered as an integral part of the building itself. It is not a
separate part of the building. When any person speaks of such a building, he
also includes the lifts as an integral part of the building, like storage water
tanks, etc.
To summarize, Manufacture, Supply, Installation and Commissioning of
Lifts/Elevators is in the nature of Works Contract activity which results in
creation of an immovable property. Hence in view of the above discussions and
Explanation to Section 17 of the CGST Act, we are of the opinion that the
applicant is not entitled to ITC of GST paid on replacement of existing
Lift/Elevator, in its premises.
06. In view of the extensive deliberations as held hereinabove, we pass an order
as follows:
ORDER
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the
Maharashtra Goods and Services Tax Act, 2017)
NO.GST-ARA-31/2019-20/B-13
dated 22-01-2020
For reasons as discussed in the
body of the order, the questions are answered thus -
Question-1:- Whether the Applicant, a Co-operative Housing Society paying Goods
and Services Tax (GST) on Maintenance Charges collected from its Members, shall
be entitled to claim Input Tax Credit of GST paid on replacement of existing
lift/ elevator at its own premises to the vendor registered under the Goods and
Services Tax Act for manufacture, supply, installation and commissioning of
lift/ elevator?;
Answer:- Answered in the negative.
Question-2:- Whether the Input Tax credit, if available; is not covered under
blocked credits under the Goods and Services Tax Act?
Answer:- Not answered in view of answer to Question No. 1 above.
Place:- Mumbai
Date: 22/01/2020
-sd-
Smt. P Vinitha Sekhar
(MEMBER)
-sd-
Shri. A. A. Chahure
(MEMBER)
Copy to:
1. The applicant
2. The concerned Central / State officer
3. The Commissioner of State Tax, Maharashtra State, Mumbai
4. The Commissioner of Central Tax, Churchgate Mumbai
Note :- An Appeal against this advance ruling order shall be made before The Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax, 15th floor, Air India building, Nariman Point, Mumbai - 400021.
Equivalent .