Air-conditioning, cooling, and ventilation system installed in a factory premise will not be considered part of plant and machinery as they are not movable and thus will not be eligible for the inputs tax credit, Authority for Advance Ruling (AAR), Gujarat has ruled.
In an application filed by Wago Private Limited, it sought to rule on the admissibility of input tax credit (ITC) of GST paid on the procurement of air conditioning, cooling, and ventilation systems including the service of installation and commissioning of the same.
The AAR, however, said that Refrigeration/Air conditioning plants are basically systems comprising of compressors, ducting, pipings, insulators, and sometimes cooling towers, etc.
They are in the nature of systems and are not machines as a whole. They came into existence only by assembly and connection of various components and parts.
Also, with regard to ventilation systems, the AAR said that if the goods are incapable of being sold, shifted, and marketed without first being dismantled into component parts, the goods would be considered as immovable and therefore not excisable to duty and hence not eligible for ITC.
With regard to air conditioning and ventilation systems, the AAR went by the principle of movable and immovable plant and machinery. As immovable does not qualify for ITC, the systems installed by Wago Systems failed to get the nod for ITC. Also, the same failed the test of mobility without getting dismantled.