In the AR Application by Wago (P.) Ltd. before Gujrat AAR
The applicant was in the process of establishing its new factory in Gujrat and would be procuring various assets to install and commission them in its factory. It filed an application for advance ruling to know the admissibility of input tax credit of GST paid on the procurement of air conditioning and cooling system and ventilation system.
The Authority of Advance Ruling observed that all the parts of air conditioning and cooling system would get assembled at the site and fitted on the wall and roof and the floor of the building. All the different parts of air conditioning and cooling system after being fitted in the building would loose their identity as machines or parts of machines and become a system, namely, Air conditioning and cooling system. It would come into existence only by assembly and connection of various components and parts. The supply of centralized air conditioning plant would be treated as supply of works contract supply.
Similarly, the ‘ventilation system’ fitted in the building cannot be taken as such to the market for sale and cannot be shifted from one place to another and its supply would be classified as work contract supply as the system per se is an immovable property.
Therefore, it was held that credit would not be available on procurement of air conditioning cooling system and ventilation system as per section 17(5) of CGST Act, 2017.