2021 (7) TMI 1344 - AAR - GST

Input tax credit - scope of Plant and Machinery - Whether the term 'other civil structure' used in the definition of 'Plant and Machinery' restricts the Land filling Pit from considering it as Plant Machinery and thereby restricts ITC to be availed on it? - HELD THAT - The analysis of the exclusions i.e. land, buildings or any other civil structures, telecommunication towers and pipelines would definitely not form part of machineries and would definitely fall under the category of fixed assets in the form of plant . Hence when these are excluded, definitely they are excluded from the claim of input tax credit even if they are plant in the general sense of business. The applicant has explained that the structure is covered under plant and this may be acceptable in the general sense, but in case of the present law, civil structures are not plant for the purpose of Chapter related to Input tax credit and Chapter VI. The case laws referred by the learned Advocate are all used to claim that the structure is a plant and that is acceptable in the general sense, but for the specific purpose of Chapters V and VI of the GST Act, they would be kept out of the category of plant . Whether the pit is a civil structure or not. It is very clear that the applicant has used materials like steel, cement, bricks and claims that they are not used for the land filling pit? - HELD THAT - The applicant is purchasing the construction materials for other than the construction of land filling pits. If they are used for construction of other structures, they would have been done on his own account and the input tax credit would not be available on those input tax credit related to those materials as per section 17 (5) (d) as they would still be civil structures (other than pits). Since those civil structures are not being used directly in relation to the main business activity, they would not be covered under the definition of plant even generally (other than for the purpose of GST). Furthermore, civil structures are excluded even if they are generally covered under plants, for the purpose of GST.

Summary

Issues Involved:
1. Whether the term "other civil structure" used in the definition of "Plant and Machinery" restricts the Land filling Pit from being considered as Plant & Machinery and thereby restricts ITC to be availed on it.

Issue-wise Detailed Analysis:

1. Definition and Interpretation of "Plant and Machinery" and "Other Civil Structures":

The applicant, engaged in solid waste management, sought an advance ruling on whether the land filling pit qualifies as "Plant and Machinery" and if ITC can be claimed on the materials and services used for its construction.

Applicant's Interpretation:
- The applicant argued that the land filling pit is an apparatus fixed to the earth by structural support and should be considered as "Plant and Machinery" under Section 17(5)(d) of the CGST Act, 2017.
- The applicant emphasized that denying ITC on the landfill pit, which is used for outward taxable supply, is against the spirit of the GST Act and would lead to a cascading effect.
- They contended that the landfill pit is not a civil structure but an apparatus used for making outward supply of services.

Jurisdictional Officer's Opinion:
- The officer opined that the landfill pit involves extensive civil work and is essentially a concrete structure, thus qualifying as a civil structure.
- It was argued that the landfill pit is an immovable property and does not fit into the definition of "Plant and Machinery" as it does not involve controlled and mechanized processes typical of industrial activities.
- The officer referenced the General Clauses Act and the Transfer of Property Act to define "immovable property" and concluded that the landfill pit is a civil structure embedded in the earth.

Advance Ruling Authority's Analysis:
- The authority examined Section 17(5) of the CGST Act, which restricts ITC on goods and services used for the construction of immovable property, except for "Plant and Machinery."
- The authority noted that the applicant did not deny that the landfill pit is an immovable property but argued that it was not constructed on their own account. However, the authority disagreed, stating that the construction was done by the applicant on their own account to provide output services.
- The explanation to Section 17(5) defines "Plant and Machinery" as apparatus, equipment, and machinery fixed to earth by foundation or structural support, excluding land, building, or any other civil structures.
- The authority found that the landfill pit is a combination of earthwork and other capital goods and cannot solely be identified as apparatus, equipment, or machinery fixed to earth by foundation. It is also not a structural support for anything.

Conclusion:
- The authority concluded that the landfill pit is a civil structure and not "Plant and Machinery" for the purposes of Chapter V and Chapter VI of the GST Act.
- Therefore, ITC cannot be claimed on the construction of the landfill pit as per Section 17(5)(d) of the CGST Act, 2017.

Ruling:
- The landfill pit is a civil structure and not "Plant or Machinery" for the purposes of Chapter V and Chapter VI of the GST Act. Consequently, ITC cannot be availed on the materials and services used for its construction.