AAAR Upholds AAR Ruling: ITC Denied on Air Conditioning, Cooling, and Ventilation Systems

Case Details: Appellate Authority for Advance Ruling, Ahmedabad Wago (P.) Ltd., In re - [2024] 163 taxmann.com 395 (AAAR-GUJARAT)

Facts: The appellant, in the process of setting up a new factory, sought an advance ruling from the Authority for Advance Ruling (AAR) regarding the eligibility of Input Tax Credit (ITC) on the purchase of air conditioning, cooling systems, ventilation systems, and related installation and commissioning services. The AAR ruled that the appellant would not be eligible for ITC on these items as they are categorized as blocked credits under Section 17(5) of the CGST Act, 2017. Dissatisfied with this decision, the appellant filed an appeal.

Held: The Appellate Authority for Advance Ruling (AAAR) reviewed the case and concurred with the AAR's decision. It was noted that the installation of air conditioning, cooling systems, and ventilation systems through a works contract service would render them immovable property. As a result, these systems would not be considered plant and machinery, thus blocking the ITC under Section 17(5)(c) of the CGST Act, 2017. Consequently, the appellant was deemed ineligible to claim ITC on the supply of these systems.