The Maharashtra Appellate Authority of Advance Ruling (AAAR) in its recent ruling in the case of M/s. Las Palmas Co-operative Housing Society Limited while upholding the AAR’s ruling held that the Co-operative Housing Societies can not avail Input Tax Credit (ITC) on lift installation charges (for replacement of lifts) paid to the contractor as lift is an immoveable property and thus blocked under Section 17(5)(c) and (d) of the CGST Act, 2017.
Facts of the case:
- The Appellant, M/s. Las Palmas Co-operative Housing Society Limited has been 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.
- The Appellant is under the process of replacing existing lift of the society for which a Contract has been awarded to M/s. Fujitec India Private Limited.
- The Appellant is also recovering a 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 an amount of contribution for the installation of the new lifts under the separate Tax Invoice.
Issue on which advance ruling was sought:
The applicant sought the advance ruling on the issue 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.
Ruling of AAR:
The AAR vide order dated 22.1.2020 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 as lift is an immovable property.
In the above case the AAR had relied upon following judicial precedents which provide that lift may fall within the meaning of ‘immovable property’:
- The Supreme Court, in the case of Triveni Engineering Industries Ltd. [2000 (8) TMI 86], had clearly laid down that after assembling, on completion of the process of erection, the item becomes a part of the building or immovable property.
- Further, the Supreme Court, in the case of Quality Steel Tubes (P) Ltd. [1994 (12) TMI 75], has held that erection and maintenance of the lifts form part of the immovable property.
It is to be noted that the Supreme Court, in the case of Kone Elevator India Pvt. Ltd. [2014 (34) STR 641], has held that the activity of supply and installation of lift is a works contract and it cannot be regarded as sale of goods under the erstwhile VAT or sales tax law, however, whether the erection and installation of lift results in an immovable or movable property was not evaluated in this case.
Aggrieved by the above ruling of AAR, the appellant has filed this appeal before Maharashtra AAAR.
Ruling of AAAR:
The coram consisting of Sanjeev Kumar and Rakesh Kumar Sharma did not find any reason to interfere with the ruling passed by the Maharashtra AAR and held that 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 in terms of section 16(2)(b) read with section 17(5)(c) and 17(5)(d) of the CGST Act, 2017.
Also Read: GST: Lift is immoveable property – No ITC can be availed: AAAR [Read Order]
Can ITC be claimed of GST paid on the purchase / installation of lift ?
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
