GST: Admissibility of ITC on Godown sheds, Factory Sheds & Pre-fabricated structure
One of the common questions is with regard to admissibility of Input Tax Credit (ITC) on Godown sheds, factory sheds, building, pre-fabricated structure etc. In the recent time, this activity is done through pre-fabricated structure companies which are done after some RCC works, Nuts & Bolts fitting with some erection, commissioning, installation by the main contractors or other associated suppliers.
Whether billing done by the prefabricated Shed supplier and / or installation thereto is eligible for ITC or not is the issue involved in such case?
It may be noted that Clause (d) to section 17(5) of the CGST Act, 2017. of reads a below:
“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: –
- 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;
In short, section 17(5) very specifically put a bar on ITC in respect of goods or services used for construction of immovable property other than plant and machinery.
It may be carefully observed that there is no such bar in respect of moveable assets. It means that ITC against movable construction/ material is available though she is not falling under the meaning of the word “Plant & Machinery.”
Only issue that could be there is with regard to the shed is whether it is movable or immovable in nature. If the shed constructed is a movable property then ITC on it will be admissible to the recipient. If structure is not attached or embedded or rooted to earth such that it cannot be detached without causing damage to the structure then such structure cannot be taken as immovable in nature. Similarly, even if it is attached to earth over the foundation through nuts and bolts to prevent vibration, still it cannot be said to be attached or embedded to earth and cannot be treated as immovable in nature as it is capable of being removed and relocated anywhere without much change in the structure and damage. The issue has been affirmed in numerous caes in the central Excise regime while analyzing the issue of whether a structure can be said to be a movable property or not.
On the basis of above, one can conclude that moveable sheds, structure, prefabricated shed, etc can offer ITC in GST.
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