Input tax credit (ITC) is not permissible on rotary car parking systems, the Tamil Nadu Authority of Advance Ruling (AAR) held.
The bench of D. Jayapriya and A. Valli noted that the Rotary car parking system is an infrastructure to cater to the requirement for greater urban density and compactness in cities and to make effective use of scarce land. The Rotary car parking system delivers additional space to park the vehicles depending upon the number of storeys built or preferred. Also, for parking vehicles in and retrieving them, it will perform upward, downward, or sideways movements as an alternative to decreasing the space for the construction of ramps indicated for the ingress and egress of vehicles.
The constituent parts/ or components of the rotary car parking are marked to be identical to those of building blocks used in the construction of multi-story conventional car parking. Therefore, the rotary car parking system is nothing but a civil structure.
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The petitioner is furnishing the services for the renting of immovable property, and to increase the quality of the output service, they wish to install a sophisticated multi-layer car parking system.
The petitioner furnished that the parking utility is important to retain the current tenants and to secure a full occupancy. The multi-layer car parking system with the highest space efficiency to accommodate parking for 18 cars is an independent installation and certainly not part of the building.
But the parking system is fixed to the base bed, the same is detachable, and the same factual position describes the position that the parking system is solely a movable property and not an immovable property. The petitioner stated that the installation of the parking system is planned exclusively for the furtherance of the business, for which GST registration has been received.
The petitioner argued that the parking system is classifiable under the category HSN code 8428, and according to quotation No. PARK/260/23 on May 9, 2023, received from Parklayer Private Limited, Coimbatore, the calculated cost of the Rotary parking SM18XL is Rs. 64,80,000, and the corresponding GST obligation is Rs. 11,66,400.
The petitioner argued that the parking system is an independent and separate utility that has the purpose of increasing the qualitative output service of the service provider to consequence in increased revenue earnings for the service provider based on the comfort level furnished to the tenants and the resultant expansion in the GST payment for the output service.
Whether ITC on the GST paid on the parking system shall counted within the ambit of blocked credits as per Section 17(5) of the CGST/TNGST Act, 2017, was the problem.
Section 17(5) addresses restricted credits or ineligible input tax credits (ITC) within the GST framework. It was submitted by the applicant that sub-sections 17(5)(c) and 17(5)(d), which block the ITC availability in specified cases, mainly deal with works contract service.
AAR remarked that under the elaboration of Sections 17(5)(c) and 17(5)(d) of the Act, the term “construction” contains re-construction, renovation, additions, alterations, or repairs, to the extent of capitalization, to the said immovable property. Consequently, the “Rotary Car Parking System” falls under the ambit of additions as envisaged in the explanation clause to the immovable property, i.e., in the same matter, an existing commercial building owned by the applicant, and becomes a part of the existing building.
AAR ruled that the ITC does not consider u/s 17(5)(d) of the CGST/TNGST Acts 2017 on the Rotary Parking System expected to be installed by the applicant.
| Name of the Applicant | M/s. Arthanarisamy Senthil Maharaj |
| GSTIN of the Applicant | 33AEQPM3966D2ZA |
| Advance Ruling No. | 07/ARA/2024 |
| Date | 30.04.2024 |
| TN GST AAR | Read Order |
