ITC of GST paid on procurement of air conditioning cooling system and ventilation system is not allowed: AAR

Case Details: Authority for Advance Rulings, Gujarat Wago (P.) Ltd., In re - [2021] 133 taxmann.com 37 (AAR - GUJARAT)

Judiciary and Counsel Details

• • Sanjay Saxena and Arun Richard, Member
  • Chitresh Gupta, C.A. and Anil Kumar for the Applicant.

Facts of the Case

The applicant was in the process of establishing its new factory in Gujarat and would be procuring various assets to install and commission them in its factory. It filed an application for advance ruling to know the admissibility of input tax credit of GST paid on the procurement of air conditioning and cooling system and ventilation system.

AAR Held

The Authority for Advance Ruling observed that all the parts of air conditioning and cooling system would get assembled at the site and fitted on the wall and roof and the floor of the building. All the different parts of air conditioning and cooling system after being fitted in the building would loose their identity as machines or parts of machines and become a system, namely, Air conditioning and cooling system. It would come into existence only by assembly and connection of various components and parts. The supply of centralised air conditioning plant would be treated as supply of works contract supply.

Similarly, the ‘ventilation system’ fitted in the building cannot be taken as such to the market for sale and cannot be shifted from one place to another and its supply would be classified as work contract supply as the system per se is an immovable property. Therefore, it was held that credit would not be available on procurement of air conditioning cooling system and ventilation system as per section 17(5) (c) of GST Act, 2017.

Case Review

• • CCE v. Globus Stores (P.) Ltd. 2011 (267) ELT 435 (SC) (para 11);
  • Municipal Corpn. of Greater Bombay v. Indian Oil Corpn. Ltd. 1991 Supp. (2) SCC 18 (para 11) and
  • Triveni Engineering & Indus. Ltd. v. CCE 2000 (120) ELT 273 (para 13) followed.
  • Quality Steel Tubes (P.) Ltd. v. CCE 1995 taxmann.com 1317 (SC) (para 13);
  • Mittal Engineering Work (P.) Ltd. v. CCE 1996 taxmann.com 138 (SC) (para 13);
  • CCE v. Solid & Correct Engineering Works 2010 (252) ELT 481 (SC) (para 13);
  • Sirpur Paper Mills Ltd. v. CCE 1997 taxmann.com 265 (SC) (para 13) and
  • CCE v. Kone Elevators India Ltd. 2001 taxmann.com 1697 (CEGAT – Chennai) (para 13) distinguished.

List of Cases Referred to

• • CCE v. Solid & Correct Engineering Works 2010 (252) ELT 481 (SC) (para 3)
  • CCE v. Kone Elevators India Ltd. 2001 taxmann.com 1697 (CEGAT – Chennai) (para 3)
  • Sirpur Paper Mills Ltd. v. CCE 1997 taxmann.com 265 (SC) (para 3)
  • Municipal Corpn. of Greater Bombay v. Indian Oil Corpn. Ltd. 1991 Suppl. (2) SCC 18 (para 3)
  • Quality Steel Tubes (P.) Ltd. v. CCE 1995 taxmann.com 1317 (SC) (para 3)
  • Mittal Engineering Work (P.) Ltd. v. CCE 1996 taxmann.com 138 (SC) (para 3)
  • Triveni Engineering & Indus. Ltd. v. CCE 2000 (120) ELT 273 (SC) (para 3)
  • CCE v. Virdi Brothers 2007 taxmann.com 1553 (SC) (para 11)
  • CCE v. Globus Stores (P.) Ltd. 2011 (267) ELT 435 (SC) (para 11)
  • Voltas Ltd. v. Commissioner of Centralised 2011 (270) ELT 541 (Tri – Mum.) (para 11).