Supply and installation of ‘car parking system’ an immovable property, hence a ‘works contract’ as defined under Section 2(119) of the CGST Act:AAR

Categories: Advance Ruling
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Fact: Precision Automation & Robotics India Limited (“Company”/”‘Applicant”), a company incorporated in India under the provisions of the Companies Act, 1956. The Applicant is engaged in providing goods and services which qualify as ‘supply’ as per provisions of the Central Goods and Service Tax Act, 2017 (“CGST Act’). The Company is engaged in the business of design, manufacturing, procurement, erection and installation of various types of car parking system. Supply and installation of car parking system involves several components, out of which certain components are manufactured by the Company and remaining are bought out items.

Issues Involved: The Applicant, seeking an advance ruling in respect of the following question:

Whether the activity of supply and installation of car parking system’ would qualify as immovable property and thereby ‘works contract’ as defined in Section 2(119) of the CGST Act.

Held: The Hon’ble AAR of Maharashtra vide Advance ruling No. GST-ARA-39/2017-18/B-46 dated June 13, 2018 stated that supply and installation of ‘car parking system’ qualify as an immovable property, and is a ‘works contract’ as defined under Section 2(119) of the CGST Act i.e.

“works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract.

Rejects Revenue’s contention that, manufacturing, erection and commissioning of car parking system is a ‘composite supply’ wherein supply of car parking system is the principal supply, and hence said supply is classifiable under HSN Code 8428 which covers “Other lifting, handling, loading or unloading machinery”; Clarifies that the car parking system, be it installed on a vacant plot of land or in a building, does not result into supply as chattel and it is not brought as an identifiable set of goods;

Remarks that, “dismantling one whole, to be assembled, for the sake of convenience or transportation is one category where there is simple assembling without further activity critical to the assembly other category is that various items are carried to be assembled and which require various step of activities to be performed on these items and only after which it is possible that they can be assembled”;Observes that the system requires substantial amount of work to be done at the site like foundation, RCC construction, erection etc. to be called a ‘car parking system’ and it obtains a state of permanency once made operational and cannot be easily removed from one place and put into another and such systems have a longevity of existence.

Citation: [TS-440-AAR-2018-NT]