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TMI Blog2020 (4) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured by the applicant is required to be exported as per condition and undertaking given to the Government while taking land on lease basis. Therefore the manufactured salt is 'Zero Rated' supply under section 16 of the Integrated Goods and Services Tax Act, 2017(herein after referred to as the "IGST Act, 2017") for the applicant. 2.2 The applicant described the process of manufacturing salt and bromine chemicals. It was submitted that the material used for constructing bunds as well as the services availed for construction of bunds are used in the course or furtherance of business, hence input tax credit is admissible under Section 16(1) of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 (herein after referred to as the "CGST Act, 2017" and the "GGST Act, 2017" respectively and collectively referred to as the "GST Acts"). It was submitted that "bunds" do not fall under any of the restrictive clauses of Section 17 of the GST Acts and hence input tax credit is admissible. It was further submitted that the "bunds" are plant and machinery used for manufacturing salt and bromine and hence clauses (c) and (d) of Section 17(5) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - South Commissionerate (Jurisdictional Officer) (herein after referred to. as the "appellant") has filed the present appeal. 5.1 It has been submitted in the grounds of appeal that the aforesaid Advance Ruling is based on erroneous interpretation of "Bunds" as and machinery' whereas as per Section 17(5) of the CGST Act, 2017, "Bunds" qualifies as immovable property. Further, aforesaid Advance Ruling has erroneously allowed input tax credit on excluded category as marked in Section 17, clauses (c) and (d). It has been submitted that in the instant case, "Bunds" also fall in the category of exclusion mentioned in section 17 being a land, building or any other civil structure and shall not be considered as the apparatus, equipment and machinery, 5.2 It has been further submitted that the applicant themselves have submitted that the applicant has to construct "Bunds" with soil. However, as per explanation given in Section 17 of the CGST Act, 2017, the expression "plant and machinery" means 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 struct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as mentioned that the Jurisdictional Authority had not furnished any submissions / comments in the matter, which has been recorded by the GAAR in the impugned order. The applicant has submitted that the authorization issued by the Principal Commissioner to file appeal, in exercise of the powers conferred under Section 107(2) of the CGST Act, 2017 is erroneous and as the authorization itself being fundamentally wrong, the appeal filed by exercising the said authorization would be void and liable to be quashed. The applicant has relied-upon-the decision in case of M/s. Tiger Services Vs. CCE, Madurai [2009-TIOL-607-CESTAT-MAD] = 2009 (3) TMI 42 - CESTAT, CHENNAI. 6.3 The applicant has further submitted that the reliance placed on the decision in the case of Konkan LNG Private Limited [2019 (27) GSTL 112 (AAR-GST)] = 2019 (7) TMI 617 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA is not sustainable in the facts of the present case. It has been submitted that as per Section 103 of the CGST Act, 2017, Advance Ruling pronounced under Chapter XVII is binding only on the applicant who had sought the advance ruling and the jurisdictional officer in respect of the applicant who has sought the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des the fact that Soil, Water, Terrazyme Chemical, GSB Metal, HB Metal, Steel, Cement, Box Culvert, LDPE Film etc. are used in the construction of the "bund". The GST Law does not mandate disallowance of input tax credit merely because various GST suffered material together become immovable post its erection/ construction post its receipt in the factory. For examples various machineries received in a factory may become a cement or sugar plant which is immovable in nature, however, the immovability in itself would not warrant denial of input tax credit under GST law, especially plant and machinery' is excluded from the restrictive provisions by way of sub-clause (c) and (d) of Section 17(5) of the CGST Act, 2017. In view of these submissions, the applicant has submitted that since "bunds" (crystallizers) are covered within the ambit of 'plant', the applicant is eligible for input tax credit on services received for such bunds, 6.7 The applicant has further submitted that the "bunds" (crystallizers) are not 'land, building and any other civil structure' which is excluded from the ambit of 'plant and machinery'. It has been submitted that the applicant has nowhere concurred that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld on 30.12.2019 wherein Shri Mahendra Kumar, Assistant Commissioner, Division VI, CGST, Ahmedabad South Commissionerate reiterated points made in appeal memorandum and Shri Manakiwala, CA reiterated the points made in written and counter submissions dated 26.12.2019. 8. The applicant vide letter dated 02.01.2020 Submitted that they would like to place additional submission and appear in person for personal hearing and requested to grant an opportunity for personal hearing and written submission. Accordingly, an opportunity of Personal Hearing has again been granted on 13.01.2020, wherein Shri Paresh M. Dave, Shai Amal p. Dave and Shri Ashish Shah appeared on behalf of the applicant and submitted detailed written submission of dated 13.01.2020, a synopsis and copies of relied upon circular and judgements in support of their arguments. Shri Mahendra Kumar, Assistant Commissioner appeared on behalf of the appellant department. 9.1 In the written submission dated 13.01.2020, the applicant has, inter-alia submitted that the bunds are clearly "Plant and machinery" as they arc the tools of the trade and without them manufacture of salt is impossible. It has been submitted that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore submitted that bunds are "plant and machinery" and therefore input tax credit is admissible to it. The applicant has submitted that the submission of the appellant department that bunds are civil structures and therefore they are not plant and machinery is incorrect and should be rejected. 9.3 It has been submitted by the applicant that the emphasis of the appellant that bunds are constructed by the respondent and are therefore immovable property and hence input tax credit is not admissible, is unwarranted and unjustified. It has been submitted by the applicant that even if what is constructed is Immovable property, if it qualifies as plant and machinery, then input tax credit is admissible under the GST Acts. The applicant referred to the definition of "works contract" given under section 2(119) of the GST Acts and submitted that the works contract necessarily relates to immovable property and when plant and machinery is carved out as an exception to works contract for granting input tax credit, it is a provision granting input tax credit even if plant and machinery is immovable property. It has been further submitted that machinery or equipment fixed to earth by foundat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit and consequently refund of tax paid on the purchases of goods and procurement of services for the construction of bunds. 9.6 It is the submission of the applicant that the appellant department has erred in relying upon the submission of the applicant in the application for advance ruling for not falling in the exception relating to plant and machinery pertaining to land or building or any other civil structure, to contend that since the applicant has categorized it as immovable property, it is not entitled to input tax credit. It has been submitted that since the applicant is seeking input tax credit on the ground that bunds are used as plant and machinery in the manufacture of salt, it has to satisfy all the conditions for treating bunds as plant and machinery. It is for that reason that in the application submitted for advance ruling, apart from submitting that bunds qualify as plant and machinery as per the decided cases, it was submitted as to why it does not fall in the exception relating to land or building or any other civil structure. The applicant has submitted that unless the contention about applicability of principle of ejusdem generis for finding out the true mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because these two words precede the expression "any other civil structure" and therefore this expression takes colour from the preceding words. It has been submitted that civil structures like land and building only are excluded from input tax credit scheme and not civil structures which directly contribute to production and consequently supply of goods. It has been submitted that bunds are not immovable properties like land and building, and hence not excluded from input tax credit scheme only because they are "constructed" and they are in the nature of "immovable property". 11.1 The appellant department has, vide letter dated 16.01.2020 inter-alia submitted that "bunds" also fall in the category of exclusion mentioned in section 17, being land, building or any other civil structure and shall not be considered as the apparatus, equipment and machinery. The judgement of Hon'ble High Court of Calcutta in the case of Singh Alloys & Steel Ltd. Vs. Assistant Collector of Central Excise [1993 (66) ELT 594 (Cal.)] = 1993 (1) TMI 97 - HIGH COURT AT CALCUTTA has been relied wherein the terms 'apparatus', 'appliance', 'equipment', 'machine', 'machinery', 'plant' and 'tool' have been exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring of salt and chemicals is actually undertaken by using bunds and therefore builds are actually contributing directly to manufacture of the goods 12.3 The applicant has requested to reject the appeal filed by the appellant department with all consequential benefit to the applicant. FINDINGS :- 13. We have carefully gone through and considered the appeal and written submissions filed by the CGST department, written submissions and synopsis filed by the applicant, submission made at the time of personal hearing, Advance Ruling given by the GAAR and other material available on record. 14. As regards the submission of the applicant that the appeal authorization has been issued under Section 107(2) of the CGST Act, 2017, which is improper hence appeal filed by exercising the said authorization would be void and liable to be quashed, it is observed that the appeal in the present case has been filed in prescribed Form ARA-03 under Rule 106(2) of the Central Goods and Services Tax Rules, 2017. Review Order No. 02/2019-20 as well as the forwarding letter clearly mentions that the appeal is tiled under Section 100(1) of the CGST Act, 2017. Even the subject of the authorization letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 17 of the GST Acts ? 16.2 Before proceeding to examine these issues, the process of manufacture of salt and construction of 'bunds, submitted by the applicant well relevant provisions of GST Acts may be referred. 16.3 The applicant has submitted the process of manufacture of salt and brine as follows :- (i) Salt and Brine are produced from sea water which requires solar evaporation. For the purpose of manufacturing salt the applicant has to construct "Bunds". which are also known as "crystallizers" wherein Salt gets deposited Due to atmospheric heat and solar evaporation, raw salt crystallize from sea water in the crystallizers within 40 to 45 days. Later on the raw salt thus deposited is harvested either manually or by machines, (ii) In order-to produce industrial salt, the harvested salt in the form of wet crystals is washed in the washery plant with brine to remove insoluble matter as well as soluble impurities. The washery plant consists of steel structures in which the applicant has to install equipment like Belt conveyor, metallic screener, hopper, and lay the civil foundation at different heights as per process requirement. (iii) After harvesting the raw salt, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.4 The relevant provisions related to input tax credit contained in Section 16 and 17 of the GST Acts are as follows :- "SECTION 16. Eligibility and conditions for taking Input tax credit. - (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) ... ... ... ... ... (3) ... ... ... ... ... (4) ... ... ... ... ... SECTION 17. Apportionment of credit and blocked credits. (1) ... ... ... ... ... (2) ... ... ... ... ... (3) ... ... ... ... ... (4) ... ... ... ... ... (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) ... ... ... (b) ... ... ... (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GST Acts, even if the same are indispensible in the process of manufacture. Whether input tax credit is inadmissible on the 'bunds' on the ground that it is immovable property. 18.1 The issue therefore arises whether the goods and services used by the applicant for construction of "bunds" / "crystallizers" are covered under sub-section (5) of section 17 of the GST Acts or otherwise. 18.2 'The works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service' is covered under clause (c) of Section 17(5) of the GST Acts. 'The goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business' is covered under clause (d) of Section 17(5) of the GST Acts. It is seen from the process of construction of bunds/ crystallizers submitted by the applicant that works contract services as well as goods and services on applicant's own account are used for construction of bunds / crystalliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd supply of goods or services" or both and includes such foundation" and structural supports. However, (i) land, building or any other civil structures; (ii) telecommunication towers; -and (iii) pipelines laid outside the factory premises, have been specifically kept outside the purview of the definition of the expression 'plant and machinery. 19.2 The expression 'plant and machinery' is specifically defined in the GST Acts. In the explanation below section 17 of the GST Acts, the definition 'plant and machinery' uses the term 'means'. As per the principles of interpretation of law laid down by the higher judiciary, the definition using the term 'means' has to be strictly construed to mean only what is stated therein, nothing more, nothing less. In this regard, the judgement of Hon'ble High Court of Kerala in the case of Kerala Public Service Commission Vs. State Information Commission, Kerala [2011 (272) E.L.T. 18 (Ker.)] = 2011 (3) TMI 1299 - KERALA HIGH COURT, may be referred, wherein it has been held as follows:- "6. ... ... ... ... When the statutory provision defining a particular term says that the said term shall mean what is stated in that definition clause, it shall m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; - A group of parts or machines arranged to perform a useful function. 19.3.3 Similarly, in the case of Modern Malleable Ltd. Vs. Commissioner of Central Excise, Calcutta-II [2008 (228) ELT 460 (Tri, - Kolkata)] = 2007 (11) TMI 232 - CESTAT, KOLKATA, definitions of the term 'apparatus' given in different dictionaries have been referred, which are as follows:- Apparatus - thing prepared or provided for a specific use; any complex machine, device, or system. [Webster's New Dictionary and Thesaurus (Concise Edition)] Apparatus - It is a collection or set of materials. instruments, appliances or machinery designed for a particular use [Mav. Web. Dic]. ap.pa.rat.us - (ap'a rat 'as. -ra tas).n, pl.-tus, -tus.as. 1. a group or aggregate of instruments, machinery, tools, materials etc.,. having a particular function or intended for a specific use. 2. any complex instrument or machine for a particular purpose. 3. any system or systematic organization of activities, functions, processes, etc., directed toward a specific goal; the apparatus of government; espionage ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice that the applicant has relied upon only part of definition of 'plant and machinery' which has been defined to mean 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. As the 'bunds' are not covered in the first limb of the definition of 'plant and machinery' as 'bunds' are not apparatus, equipment or machinery, they cannot be considered to be covered in the said definition. 19.5 The definition of 'plant and machinery' given in the GST Acts is very specific. Therefore, when the 'bunds' are not covered in the said definition, the fact that the 'bunds' are essentially used in the manufacturing process would not make any difference and the 'bunds' would not get covered under 'plant and machinery' on this ground, as pleaded by the applicant. 19.6 The applicant has pleaded that plants and various machinery are also "constructed". and plant and machinery are also often permanently fixed or embedded to earth by foundation, and hence immovable property, but still they are considered and referred to as 'plant and machinery" in commercial parlance. They have referred to Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s permissible in respect of certain assets specified therein, namely, buildings, machinery, plant and furniture owned by the assessee and used for the purpose of business while section 43(3) of the Income Tax Act defines 'plant' in very wide terms saying "plant includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purpose of the business". In this context, Hon'ble Supreme Court decided whether technical knowhow in the shape of drawings, designs, charts, plans, processing data and other literature etc. falls within the definition of 'plant. (ii) Commissioner of Income Tax, Gujarat Vs. Elecon Engineering Co, Ltd. [1974 96 ITR 672 Guj,] = 1974 (2) TMI 7 - GUJARAT HIGH COURT. In this case also, the issue before the' 'Hon'ble High Court was whether drawings and patterns received by an assessee from a foreign company under a collaboration agreement can be said to be "plant" on which depreciation is allowable under section 32 of the Income Tax Act, 1961. In the present case, the definition of 'plant and machinery' given in Section 17 of the GST Acts is different than the definition of 'plant' under Income Tax Act, which was under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been specifically given in Section 17 of the GST Acts and the said definition is different than the definition of 'capital goods' given under the Gujarat Value Added Tax, 2003, which was under consideration before the Hon'ble High Court in the case of Pipavav Defence and Offshore Engineering (supra). The subject matter of dispute (bund) in the present case is also different. As held by Hon'ble Apex Court in the case of Collector of Central Excise, Calcutta Vs. Alnoori Tobacco Products [2004 (170) ELT 135 (SC)] = 2004 (7) TMI 91 - SUPREME COURT, circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases; that disposal of cases by blindly placing reliance on a decision is not proper. Therefore, the aforesaid judgements relied upon by the applicant are found applicable in the present case. 19.9 In view of the foregoing, we hold that 'bund' / crystallizer' are not covered within the definition of 'plant and machinery' given under Section 17 of the GST Acts. Whether 'bunds' are 'any other civil structure? 20.1 As the bunds/ crystallizer do not fall within the main part of the definition of 'plant and machinery' giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mprovement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Thus, the phrase 'any Other civil structures' mentioned in the exclusion clause (i) of the definition of 'plant and machinery' would mean all other civil structures, other than foundation and structural supports used to fix the apparatus, equipment, and machinery to earth. 20.2.4 The applicant has relied upon the judgement of Hon'ble Supreme Court in the cases of Amar Chandra Chakraborty Vs. Collector of Central Excise [AIR 1972 SC 1863] = 1972 (5) TMI 59 - SUPREME COURT and Siddeshwari Cotto Mills (P) Ltd. Vs. Union of India [AIR 1989 SC 1019] = 1989 (1) TMI 126 - SUPREME COURT. In the case of Siddeshwari Cotton Mills (P) Ltd., Hon'ble Supreme Court inter-alia held that the preceding words in the statutory provision which, under this particular rule (ejusdem generis) of construction, control and limit the meaning of the subsequent words must represent a genus or a family which admits of a number of species or members, If there is only one specie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court of Delhi held as follows :- "16. As regards the applicability of the principle of ejusdem generis sought to be pressed into service by the Department, it would be trite that the said principle is not an inviolable rule of law. It is only in the absence of any indication to the contrary that it may be pressed into service. When Entry No. 45 is absolutely clear and unambiguous, the rule of ejusdem generis can have no application. As held in Siddeshwari Cotton Mills (P) Ltd. (supra) and Grasim Industries Ltd. (supra), the said rule has to be applied with caution and not pushed too far. The rule reflects an attempt to reconcile incompatibility between the specific and general words and applies only where the context of the enactment does not require restricted meaning to be attached to the words of general import. But, as stated above, a note of caution has been sounded by the Apex Court in this regard, namely, that the rule is to be applied with care and caution and in the absence of any indication to the contrary. In the instant case, in our view, the said rule of ejusdem generis is wholly inapplicable." 20.2.5 In the present case, the natural meaning of the phrase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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