Can ITC be availed on lift and elevators?
Section 17(5) of the CGST Act, 2017 provide a list of supplies in respect of which ITC is blocked. This list includes 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. Further, goods or services received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account or even when it is used in the course or furtherance of business cannot be claimed as input tax credit. ‘Construction’ is deemed to include re-construction, renovation, additions or alterations or repairs.
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.
Further Lift is classified under the GST HSN 8428 which covers under the head of ‘Industrial Machinery’.
Definition of Immovable Property in Clause 3(26) of General Clauses Act, 1897:- “ land and benefits arising out of land and things attached to earth permanently fastened.”Section 3 of the Transfer of Property Act 1882, the phrase” attached to earth” means-
(a) rooted in the earth, as in the case of trees and shrubs;
(b) imbedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached.
Considering above in my view GST of input tax credit paid on lift is not available since they are assembled/installed at the site to suit the requirement in a particular building. Lift cannot be dismantled without giving substantial damage to its components and thus cannot be reassembled. Lift is not being capable of being sold or shifted as such after removal, not capable of being marketed in the original form, loses it economic value after dismantling/removal. A lift does not have an identity when removed from the building. Lift is an integral part of the building. Lift is attached to building for the permanent beneficial enjoyment of building.
The Maharashtra AAAR ruled that no Input Tax Credit (ITC) can be claimed on Lift Installation Charges. In the Judgment of M/S Las Palmas Co-operative Housing Society Ltd. (Dated 20/07/2020 Order No MAH/AAAR/RS-SK/24/2020-21). The Appellant is recovering an 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.
The Appellant has given a contract to Fujitec India Pvt. Ltd. for the installation of new Lift for which they booked as Capital Expenditure in their books without availing the depreciation on tax component charged by Fujitec.The AAAR ruled that the Appellant would not be eligible to avail the ITC in respect of the GST paid to the lift contractor, in terms of Section 16(2)(b) read with Section 17(5)(d) of the CGST Act, 2017
Further more AAR of MP in the case of M/S Jabalpur Hotels Pvt. Ltd. Dated 08/06/2020 Order No. 10/2020). In this case is held that lift has become the part of the building and ITC shall not be available in terms of Section 17(5)(d) of the CGST Act, 2017. In this the AAR finds that lift consists of components or parts (goods) like lift car, motor, ropes, rails etc. and each of them has its separate identity prior to installation and when they are assembled/installed together they create lift.Parts of lift are assembled/installed at the site in accordance with its design and requirement of the building which may include the floor levels and the lift has to open on different floors.A lift does not have a separate identity when removed from the building. Therefore, the lift cannot be said separate from a building.
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