Rotary Car Parking System Is Civil Structure, GST ITC Not Admissible: AAR

The Tamil Nadu Authority of Advance Ruling (AAR) has ruled that input tax credit (ITC) is not admissible on rotary car parking systems.

The bench of D. Jayapriya and A. Valli observed that the Rotary car parking system is an infrastructure with the aim of catering to the need for greater urban density and compactness in cities and to make better use of scarce land. The Rotary car parking system provides additional space to park the vehicles depending upon the number of storeys built or preferred. In addition, for the purpose of parking vehicles in and retrieving them out, it will also perform upward, downward, or sideways movements as an alternative to reduce the space for the construction of ramps meant for the ingress and egress of vehicles. The constituent parts/ or components of the rotary car parking are observed to be analogous to those of building blocks utilized in the construction of multi-story conventional car parking. Hence, the rotary car parking system is nothing but a civil structure.

The applicant is supplying services for the renting of immovable property, and to enhance the quality of the output service, they are desirous of installing a sophisticated multi-layer car parking system.

The applicant submitted that the parking facility is highly essential to retain the existing tenants as well as to have 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. Though the parking system is fixed to the base bed, it is detachable, and this factual position illustrates the position that the parking system is only a movable property and not an immovable property. The applicant pointed out that the installation of the parking system is intended solely for the purpose of furtherance of the business, for which GST registration has been obtained.

The applicant contended that the parking system is classifiable under the category HSN code 8428, and as per the quotation No. PARK/260/23 dated May 9, 2023, received from Parklayer Private Limited, Coimbatore, the estimated cost of the Rotary parking SM18XL is Rs. 64,80,000/-, and the corresponding GST liability is Rs. 11,66,400.

The applicant contended that the parking system is an independent and separate facility intended for the purpose of enhancement of the qualitative output service of the service provider to ultimately result in increased revenue earnings for the service provider on account of the comfort level provided to the tenants and the resultant increase in the payment of GST for the output service.

The issue raised was whether ITC on the GST paid on the parking system would fall within the ambit of blocked credits in terms of Section 17(5) of the CGST/TNGST Act, 2017.

Section 17(5) addresses blocked credits or ineligible input tax credits (ITC) within the GST framework. The applicant submitted that sub-sections 17(5)(c) and 17(5)(d), which block the availability of ITC in certain specified cases, mainly deal with works contract service.

The AAR noted that, as per the explanation in Sections 17(5)(c) and 17(5)(d) of the Act, the term “construction” includes re-construction, renovation, additions, alterations, or repairs, to the extent of capitalization, to the said immovable property. Hence, “Rotary Car Parking System” falls under the ambit of additions as envisaged in the explanation clause to the immovable property, i.e., in this case, an existing commercial building owned by the applicant, and becomes a part of the existing building.

The AAR held that input tax credit is not admissible under Section 17(5)(d) of the CGST/TNGST Acts 2017 on the Rotary Parking System desired to be installed by the applicant.

Applicant's Name: Arthanarisamy Senthil Maharaj

Date: 30/04/2024

Click Here To Read The Ruling