In Re: M/s. Tewari Warehousing Co. Pvt. Ltd.
GST
2019 (2) TMI 1009 – AUTHORITY FOR ADVANCE RULING, WEST BENGAL – 2019 (22) G. S. T. L. 156 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, WEST BENGAL – AAR
Dated:- 18-2-2019
Case No. 36 of 2018 Order No. 40/WBAAR/2018-19
GST
SYDNEY D'SILVA AND PARTHASARATHI DEY, MEMBER
Applicant's representative heard Arani Tewari, FCA
1. The Applicant, stated to be supplying warehousing services, is constructing a warehouse on leasehold land, using pre-fabricated technology. According to the Applicant, it can be dismantled and reconstructed at a different location. He seeks a ruling on whether the input tax credit is admissible on the inward supplies for construction of the said warehouse.
The above question is admissible under section 97(2)(d) of the CGST/WBGST Act, 2017 (hereinafter collectively called 'the GST Act).
The Applicant declares that the issue raised in the application is not pending nor decided in any proceedings u
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ss, growing crops and the like) or anything that is permanently fixed to such things which are so embedded to the ground can be called an immovable property.
On the other hand, the System, according to the Applicant's submission, is fixed by anchor bolts to a low RCC platform embedded to the ground, and it is the only civil structure. The rest of the structure, like columns, beams, rafters, wall sheets, roof shed etc. are all joined with one another by nuts and bolts, and can be easily dismantled and restructured at another location.
The low-rising RCC platform is, of course, permanently embedded to the ground. However, according to the Applicant, the warehousing system built thereon, can be dismantled, and thus reduces repeated capital expenses in the event of a shift of location. Moreover, the question of treatment of a property that is attached to a structure permanently embedded on earth has a long legal history. The consensus that has emerged favours treatment of such property a
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up and no further. It is the System that is beneficially enjoyed, not the RCC structure.
3. “Immovable property” is not defined under the GST Act. The term 'goods' is defined under Section 2(52) of the GST Act as all kinds of moveable properties other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.
Property other than goods, money and securities should, therefore, be considered as 'immovable property' under the GST Act.
However, in the absence of a definitive explanation under the GST Act, recourse is being taken to other allied Acts dealing with “property” to determine the definition of “Immovable property”.
It is seen that Section 3(26) of the General Clauses Act, 1897 defines “Immovable Property” as to include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attac
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le determining whether an article is permanently fastened to anything attached to the earth both the intention as well as the factum of fastening has to be ascertained from the facts and circumstances of each case.
In S/S Triveni N L Ltd [RN – 910, 911 & 912 of 2001 (All)] = 2014 (4) TMI 842 – ALLAHABAD HIGH COURT Allahabad High Court observes that 'permanently fastened to anything attached to the earth' has to be read in the context for the reason that nothing can be fastened to the earth permanently so that it can never be removed. If the article cannot be used without fastening or attaching it to the earth and is not removed under ordinary circumstances, it may be considered permanently fastened to anything attached to the earth.
Furthermore, in the context of the GST Act, if the article attached to the earth is not agreed to be severed before supply or under a contract for supply, it ceases to be goods and, for that matter, a moveable property.
5. In the case of Solid & Correct
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an immovable property merely because it is attached to a foundation embedded in the earth. The test is whether the machine can be dismantled and sold in the market. This judgment is based on the premise that the machine and not the foundation to which it is attached is the property being used and enjoyed. It is not relevant in the context where the civil structure embedded on earth forms an integral part of the property.
6. In the present context, the Applicant is constructing the warehouse on a piece of land, taken on lease from Kolkata Port Trust for a period of thirty years for the purpose of building a storage facility. The intention, therefore, is beneficial enjoyment for more than two decades of the property being built. Unless the business is wound up, the Applicant, after the expiry of the lease, can approach KOPT for granting a fresh lease. The structure being built is, therefore, not for the purpose of temporary enjoyment, but intended to be used as a permanent structure sub
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ked on the floor. Construction of the floor, its load-bearing capacity and the space it occupies is, therefore, critical to the construction of the warehouse. The System that the Vendor supplies, as transpires from the literature annexed to the Application, does not apparently include any specific description of the floor as a pre-fabricated load-bearing structure.
Although the written submission made at the time of Hearing refers to the floor as a pre-fabricated structure, description of the System, as the Vendor provides in the literature, does not include any specification. In a cross-sectional diagram of the typical pre-engineered steel building the Vendor provides a vivid pictorial illustration of the various parts of the structure – the walls, roof, doors and windows etc. that will be built upon the floor, but does not provide any description of the floor as a pre-fabricated structure.
The literature refers to wide bay purlins spanning up to 12 M for better shop floor lay out a
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UTTARAKHAND needs to be distinguished in this context. The ld AAR in Uttarakhand has been dealing with mobile towers fixed to a pit with a concrete base. Clearly, the intention is beneficial enjoyment of the mobile tower and not of the concrete base. The mobile tower can, of course, be easily dismantled and fixed elsewhere. The ld AAR has, therefore, treated the mobile tower infrastructure, including the pole, as movable property. In the case of the warehouse, however, the pre-fabricated movable structures do not constitute the property of the warehouse. They are building blocks applied to a civil structure attached to the land to construct a complete warehouse. The warehouse cannot be conceived without the beneficial enjoyment of the civil structure, which is an integral part of the property. The decision in Vindhya Telelinks Ltd (supra) is not, therefore, relevant. In this connection, reference may be made to clause 4(v) of the Circular No. 58/1/2002-CX dated 15/01/2002, where it is
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