Case- Las Palmas Co-operative Housing Society Ltd.  114 taxmann.com 233 (AAR – MAHARASHTRA)
Applicant is 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. Applicant has proposed to replace the existing LIFT along with its supporting structures. Applicant has raised invoices on Flat Owner showing a contribution of Rs. 51,445/-, plus GST thereon towards installation of a new lift.
Whether Applicant would 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.
3. Contention of Applicant: –
Applicant submitted that 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. Therefore, Plant and Machinery is not covered under blocked list of ITC u/s. 17; and thus, applicant is entitled to claim ITC as per the provisions of the Goods and Services Tax Law.
Observation by AAR: –
1. Contract for Installation of Lift is an indivisible Contract:-The contracts entered into by applicant with the contractor for installation of lift, will be considered as indivisible works contracts which will involve high technical skill, knowledge and experience of mechanical and electrical as well as 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.
2. Subsequent to Installation, Lift becomes integral part of the Building, thus falls within the ambit of Immovable Property-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.
3. Judicial Precedence on article becoming part of building or immovable property on assembling, or on completion of process of erection- Hon’ble Apex Court in the case of Triveni Engg. Industries Ltd. v. CCE. 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. CCE. U.P. 1995 taxmann.com 1535 (SC) it was held by the Apex Court that Erection and maintenance of the lift forms part of the immovable property. In the case of Otis Elevator Company (India) v. Superintendent of Central Excise on 27 August, 2002 relying upon the decision of Otis Elevator Company (India) Ltd., 1981 (3) ELT 720 (GOI) it was 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. 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.
4. Explanation to Section 17 and lift being civil Structure subsequent to installation, therefore excluded from the purview of “Plant and Machinery”- Explanation to section 17(5) provides that ITC is available for “plant and machinery” and 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. 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.
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, applicant was held to be not entitled to ITC of GST paid on replacement of existing Lift/Elevator, in its premises.
It would not be wrong, if it is stated that what is an immovable property and what’s not has become the key litigation in GST amongst other things. There are judgements both favouring and against the department and the taxpayers. In the article for which link is being provided, we had tried to summarize various cases, circulars which have ben commonly referred while deciding question of movable/immovable property.