No Input Tax Credit is available on charges paid for Installation of lift Charges. There are various case laws stating the same and still there is ambiguity.
1. What are the relevant provisions in GST which deal with availment of ITC in case of Installation of Lift?
The following are the relevant provisions for the above case:-
A. As per Section 16(2)(b) of the CGST Act, 2017:-
16. Eligibility and conditions for taking input tax credit.
(2) Notwithstanding anything contained in this section, no registered person shall
be entitled to the credit of any input tax in respect of any supply of goods or
services or both to him unless, ––
(b) he has received the goods or services or both.
Explanation. -For the purposes of this clause, it shall be deemed that the
registered person has received the goods or, as the case may be, services––
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.”
B. Section 17(5)(c) and 17(5)(d) of the CGST Act, 2017
17. Apportionment of credit and blocked credits.
(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;
(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 clauses (c) and (d), the expression
“construction” includes re-construction, renovation, additions or alterations or
repairs, to the extent of capitalization, to the said immovable property;
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
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) pipelines laid outside the factory premises.”
2. Is there any recent AAAR ruling related to above?
Yes, The Hon’ble AAAR, Maharashtra in case of M/s Las Palmas Co-operative Housing Society via Order No. MAH/AAAR/RS-SK/24/2020-21 dated July 20, 2020 held that the Input Tax Credit (ITC) in respect of charges paid to lift contractor for installation of lift shall not be available in terms of Section 16(2)(b) read with Section 17(5)(c) and 17(5)(d) of the CGST Act, 2017.
Issue: Whether the Appellant is eligible for the ITC 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?
Held: The Hon’ble AAAR, Maharashtra in Order No. MAH/AAAR/RS-SK/24/2020-21
dated July 20, 2020 held that the definition of the “Plant and Machinery” categorically excludes building or any other civil structure. The lifts/elevators, erected, installed and commissioned in the buildings, are construed as an integral part of those building as held by the Hon’ble AAR on the basis of the Hon’ble Apex Court judgment in the case of
Triveni Engg. Industries Ltd. v. C.C.E. [2000 (120) ELT 273]
Quality Steel Tubes (P) Ltd. v. C.C.E.. U.P. [1995 (75) E.L.T. 17 (SC)]
Otis Elevator Company (India) v. Superintendent of Central Excise [2003
(151) E.L.T. 499 (Bom.)]
Hence, the same would be excluded from the category of “Plant and Machinery”, in
terms of the provisions related to the ‘Plant and Machinery” laid out.
3. Is there any Supreme Court case law for the same?
Yes, the Larger Bench of the Hon’ble Supreme Court in the case of M/s Kone
Elevator India Pvt. Ltd. v. State Of Tamil Nadu and Others [2014 (304) E.L.T. 161
(SC)] has held that in the case of installation of lift after the goods are assembled and installed with skill and labour at the site, it becomes a permanent fixture of the building. Once it has been established that the lift, after its erection, installation and commissioning, would be considered as part of the building, and hence immovable property, the Appellant cannot claim ITC on the Input Services in terms of the provisions laid out under Section 17(5)(d) of the CGST Act, 2017.
4. Is there any exception to above law?
Circular No. 109/28/2019-GST dated July 22, 2019 states that ITC is allowed to a
Residential Welfare Association (RWA) in respect of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other
sanitary/hardware fillings etc.) and input services such as repair and maintenance
services. Relevant portion of the Circular is reproduced below:
“3. Is the RWA entitled to take input tax credit of GST paid on input and services used by it for making supplies to its members and use such ITC for discharge of GST liability on such supplies where the amount charged for such supplies is more than ₹ 7,500/- per month per member? RWAs are entitled to take ITC of GST paid by them on capital goods (generators, water pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/hardware fillings etc.) and input services such as repair and maintenance services.”
It is not clearly mentioned that Input Tax Credit can be availed upon charges paid for installation of lift, but still call can be taken and the same can be contested in AAR or in court of law.
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