Paver block can be defined as a stone-based road-building material in the form of blocks of solid rock commonly used for creating a pavement or hardstanding.
Advance ruling was sought by applicant M/s Sundharams Private Limited u/s 97 of CGST Act and Maharashtra SGST Act in respect whether the taxes paid on purchase of paver blocks laid on plain surface to park the cars of customers are allowed?
Contention of Applicant:
- M/s Sundharams Private Limited (hereinafter referred as ‘the applicant’) is engaged in providing warehousing, storage, and support services to the Original Equipment Manufacturers (OEMs) of the automobile industry, transports cars tractors using its fleet of car carrier vehicles.
- During service, the cars are stored & on the same rental charges has been collecting & paying applicable GST.
- If the cars are placed on the ordinary surface, it will be subject to quicker wear & tear due to the accumulation of water, dust eye, in the wheels of such automobiles. To ensure efficient and safe parking applicant has purchased taxpaid paver blocks which are laid in the parking area of the land without any attachment to the cart.
- Such paver blocks are not to be permanently embedded on earth and are capable of being removed as such without causing damage to them for reuse elsewhere.
- Moreover, the Lease Deed executed by the Company with its landowners contains a clause to the effect that the Company shall remove such paver blocks and take possession of the same on the vacation of the premises. Hence such paver blocks are to be construed as moveable items.
- Applicant contented that it is out of the clutch of section 17(5) as laying of paver blocks on land does not amount to construction of immovable property. Also, the expenditure is not capitalised in the books of accounts.
- Aside above all the conditions of section 16 is compiled to avail ITC.
- Therefore, applicant feels that ITC related to same shall be eligible as the same is being used to provide output services to customers.
Contention of Department:
- One cannot shift paver block as & when required like movable goods.
- It is admitted that paver blocks are fastened to land using interlock blocks & firms support of outer wall. These blocks are not kept loosely on the ground. Hence, mere cementing material not used does not mean paver block are not fastened to the earth.
- The flexibility to re-use does not mean that blocks will not be removed and re-erected frequently. They are meant to be permanently fixed to the earth however when the need arise, client may remove them& re-erect.
- Paver blocks once laid on the land are not movable to another place of use in same position unless dismantled and laid again at later place. Hence the paver blocks are permanently embedded to earth and hence paver blocks on the land amounts to construction of immovable property u/s 17(5).
In view of above discussions, the Authority ruled that paver blocks laid on land would qualify as immovable property and therefore applicant cannot avail ITC in the subject case as per Section 17(5) (d) of the CGST Act, 2017.
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