2020 (9) TMI 736 - AAR - GST

Input tax credit of tax paid or deemed to have been paid - 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 - Section 17(5)(d) of the CGST Act, 2017 denies availment of ITC on goods and services when supplied for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services are both are used in the furtherance of business. Here, two aspects are noteworthy. One is that such goods and services should be used for the construction of an immovable property and the other is that the activity is carried on his own account. Applicant does not deny that the land filling pit is an immovable property. However, the applicant contends that the activity is not carried on his own account but is intended for offering services. The explanation given at the end of Section 17(5) of CGST Act, 2017 defines plant and machinery as apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes Land, building or any other civil structure. We find that land filling pit is a combination- of earth work and other capital goods as given in the brief submitted by the applicant. It can t solely or in itself be identified as apparatus, equipment and machinery fixed to earth by foundation. It is also not a structural support for anything. Therefore, we do not agree with the applicant s view that the land filling pit falls under plant and machinery. However, the discussion would be incomplete without deciding the question of Civil Structure, i.e. whether the land filling pit is a civil structure or not. Inasmuch as the said section is found to be valid by the Hon ble High Court, we do not find any reason to go beyond the Statutory Provisions. However, since the appeal against the High Court order supra is pending before the Hon ble Supreme Court, we refrain from commenting on the eligibility of the ITC in the instant case. The Landfilling pit is not a plant and machinery but a civil structure .

Summary

Issues Involved:
1. Eligibility of Input Tax Credit (ITC) on construction of a landfill pit.
2. Classification of the landfill pit as "plant and machinery" or "civil structure" under GST laws.
3. Interpretation of Section 17(5)(d) of the CGST Act, 2017.
4. Consideration of the landfill pit as an immovable property.

Issue-wise Detailed Analysis:

1. Eligibility of Input Tax Credit (ITC) on Construction of a Landfill Pit:
The applicant, engaged in solid waste management, sought an advance ruling on whether the landfill pit qualifies as "plant and machinery" for ITC purposes. According to Section 17(5)(d) of the CGST Act, 2017, ITC is not available for goods and services used in the construction of immovable property (other than plant and machinery). The applicant argued that the landfill pit should be considered plant and machinery, thus making ITC claimable.

2. Classification of the Landfill Pit as "Plant and Machinery" or "Civil Structure" under GST Laws:
The applicant contended that the landfill pit, being an apparatus fixed to the earth, should be classified as plant and machinery. However, the jurisdictional officer argued that the landfill pit involves extensive civil work and should be considered a civil structure. The officer highlighted that the landfill pit is an immovable property embedded in the earth, similar to buildings and roads, and thus does not fit the definition of plant and machinery.

3. Interpretation of Section 17(5)(d) of the CGST Act, 2017:
Section 17(5)(d) restricts ITC on goods and services used for constructing immovable property, excluding plant and machinery. The applicant argued that denying ITC on the landfill pit contradicts the GST Act's objective of preventing tax cascading. They also claimed that the landfill pit is not constructed on their own account but for providing services, thus should be eligible for ITC. The authority, however, found that the applicant constructed the landfill pit on their own account for their business, making it ineligible for ITC under Section 17(5)(d).

4. Consideration of the Landfill Pit as an Immovable Property:
The authority examined whether the landfill pit qualifies as a civil structure or plant and machinery. They concluded that the landfill pit involves significant civil engineering work and is embedded in the earth, making it an immovable property. The authority also referred to the General Clauses Act, 1897, and the Transfer of Property Act to define immovable property, reinforcing that the landfill pit is a civil structure.

Judgment:
The authority ruled that the landfill pit is not plant and machinery but a civil structure, thus ITC cannot be claimed on its construction as per Section 17(5)(d) of the CGST Act, 2017. The ruling emphasized that the landfill pit involves extensive civil work and is constructed on the applicant's own account, making it an immovable property and ineligible for ITC. The authority also noted the pending appeal in the Supreme Court regarding a similar case but refrained from commenting further.