Page 41 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] ITC ON DETACHABLE WOODEN FLOORING AND STACKABLE GLASS PARTITION J99

ITC ON DETACHABLE WOODEN FLOORING AND STACKABLE GLASS PARTITION
ITC ON DETACHABLE WOODEN FLOOR-
ING AND STACKABLE GLASS PARTITION
ITC ON DETACHABLE WOODEN FLOORING AND STACKABLE GLASS PARTITION
By
Sanjeev Singhal
CHARTERED ACCOUNTANT, SR. PARTNER GRANDMARK &
ASSOCIATES

Are detachable wooden floorings and stackable
glass partition immovable property or can they claim
benefit of ITC was the issue in the decision of AAAR in
the matter of We Work India Pvt. Ltd. vide Karnataka Au-
thority for Advance Ruling vide Ruling No. KAR ADRG 106/2019, dated
30-9-2019 [2020 (32) G.S.T.L. 63 (A.A.R. - GST - Kar.)]. The issue is discussed
herein.
Fact of the Case :
(1) The appellant is a private limited company engaged in providing
shared workspace/Office Space to the freelancers, start-ups, small
businesses and large enterprises. The appellant provides a “space-
as-a-service” membership model wherein it offers individuals and
organizations the flexibility to scale work space up and down as
needed, with the ability to consume space by the minute, by the
month or by the year. The appellant business model offers their
members, 24/7 access to their locations, beautifully designed work-
spaces, flexible workspace configurations as needed, a common set
of amenities, on-site community teams, a growing number of value-
added products and services and a member experience powered by
technology.
(2) The appellant procures goods and services from various contractors
for fitting-out of the workspaces and provides the said workspace
on rent, to various companies and individuals as sharing work-
spaces. The appellant has paid applicable GST on such procure-
ments. Section 16(1) of the CGST Act entitles a registered person to
take credit of input tax charged on any supply of the goods or ser-
vices or both which are used or intended to be used in the course or
furtherance of business. However, as per Section 17(5) of the CGST
Act, 2017, a restriction is imposed with respect to input tax credit
(hereinafter referred to as “ITC”) on procurement of goods and ser-
vices or both received by the taxable person for construction of an
immovable property. However, the term ‘construction’ is limited to
supplies to the extent capitalized to an immovable property.
(3) The two major components which are in the nature of furniture and
fixtures, that are used in the appellant’s buildings, and which was
the subject of the reference to AAR, were -
• Detachable 14 mm Engineered wood with Oak top wooden
flooring; and
• Detachable sliding and stacking glass partitions.
GST LAW TIMES  23rd July 2020  41