The Authority of Advance Ruling, Telangana consisting of S.V. Kasi Visweswara Rao, and Sahil Inamdar has held that Input Tax Credit (ITC) under Goods and Service Tax (GST) is not admissible on the inward supplies of pre-fabricated technology.
BACKGROUND
The applicant M/s. Sanghi Enterprises has claimed that they are constructing a shed on leased land and that such property being constructed is a prefabricated shed (PFS) system.
Shed is nothing more than an assembly of the System, which is prefabricated and pre- engineered components, fixed together in a modular form with nuts and bolts and without welding so that it can be easily unfixed.
ISSUE RAISED
Whether Input Tax Credit is allowed for construction of sheds using prefabricated technology?
RULING
The AAR held that Applicant is constructing a Prefabricated shed (‘PFS’) on land and it is intended to be used as a permanent structure for the purpose of conducting business, which has beneficial enjoyment of the land on which it is being built. The applicant intends to use technology for the construction of the ‘PFS’, which involves the application of pre-fabricated structures and also civil work for supporting the pre-fabricated structure and developing the RCC platform of the ‘PFS’. If not for the purpose of beneficial enjoyment by way of conducting business on the RCC platform, the ‘PFS’ has no separate existence.
The AAR ruled that the ‘PFS’ being constructed is, therefore, an immovable property and the input tax credit is not admissible on the inward supplies, which may include Works contract services, for its construction, as the credit of such tax comes under category of blocked credits as per section 17(5)(d) and section 17(5)(c) of the CGST/TGST Act, 2017.
Applicant Name: Sanghi Enterprises
Citation: TSAAR Order No.04/2023\
