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TMI Blog2021 (8) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant has stated that as the Air Separation Unit (ASU) which is put up on the land leased is a Plant and Machinery , the restriction at Section 17(5)(d) is not applicable in respect of the goods and services used for the construction of such Plant and Machinery. Section 17(5) of the Act, starts with the Non-obstante clause, Notwithstanding anything contained in sub-section (1) of section 16 , which indicates that the provisions under Section 17(5) prevails over section 16(1) of the Act. From the explanation of Plant and Machinery , it is evident that while Plant and Machinery includes foundation and structural supports required to fix apparatus, equipment, machinery on the earth, land building or other civil structures are specifically excluded. The services availed from IPL is in relation to acquiring lease of the land. By the specific exclusion in the definition of Plant and Machinery , as land stands excluded from Plant and Machinery , the services availed and utilized for acquiring such land on lease is restricted under Section 17(5)(d) of the CGST Act 2017, though the activity is in the course or furtherance of the business of the applicant and the credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the remainder period of 72 years in respect of part of the property for setting up of State-of-the-art medical and industrial gases plant, i.e. Air Separation Unit (ASU) for manufacture and supply of Industrial gases.; INOX and IPL entered into a Memorandum of Understanding for transfer of leasehold rights(MOU) dated 20.11.2020.; SIPCOT vide Order No. P-II/SICH/II/IPL/146/2012 dated 28.12.2020 had accorded its approval for transfer of leasehold rights to INOX. Accordingly, SIPCOT has amended its original lease agreement vide a modified lease deed on 12.01.2021 in order to lease the part property to INOX. In terms of Clause 2 of MOU, IPL has agreed to transfer the leasehold rights in the part property to INOX for a total consideration of ₹ 15,00,00,000/-. 2.2 INOX has stated that IPL has sought an Advance Ruling on whether the transfer of leasehold rights in the part property amounts to supply and accordingly whether GST would be leviable on the consideration receivable from INOX.; that in the event where the authority rules that the transfer of leasehold rights to INOX is a supply and leviable to GST, they require to understand the admissibility of Input Tax Credit (IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media. The applicant consented and the hearing was held on 16.07.2021 virtually. The Authorised representative Shri.Rohit Jain, Advocate appeared for the hearing. He reiterated the submissions made in their application. He further stated that their only question is whether they are eligible for ITC in case the transfer of leasehold rights by M/s. IPL to M/s. INOX is found to be a supply of service. He stated that Section 17(5) of the CGST Act 2017 will not bar them from availing ITC as there is no construction activity involving as immovable property in this case. Pictures of the entire area, plant and machinery, cooling towers, etc were displayed for reference. 4. The applicant is under the administrative control of the Central Jurisdiction. The central jurisdictional authority vide their letter F.No. GEXCOM/TECH/MISC /1303/ 2021 -TECH-O/O Pr. Commr-CGST-Chennai(N) dated 04.06.2021 has submitted that there are no proceedings pending in the case of the applicant. 5. The State jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply, they would be eligible to avail the tax paid as Input tax Credit. Their contention are that,- they are setting-up an ASU Plant on the leased property to manufacture the industrial gases which are taxable outward supply under GST; ASU once fully constructed, will be capitalized as a Plant and machinery in their books of accounts Section 16(1) entitles a registered person to take credit of input tax charged on the supplies received and intended to be used for furtherance of the business ASU does not result in construction of any land, building, civil structure and it is also not a telecommunication tower or pipeline, hence it does not fall under the exclusion under Section 17(5)(d) of the CGST Act 7.2 Before proceeding further, the relevant statutory provisions are examined as under:- Section 2(19) of CGST Act: capital goods , means goods, the value of which is capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business; Section 16(1) of CGST Act: Every registered person shall, subject to such conditions and restrictions as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r withdrawing the leasehold held by them in favour of the applicant and on approval by SIPCOT, the applicant has entered into a lease agreement with SIPCOT on payment of necessary charges as required and acquired the leasehold rights for the land. Thus, it is evident that the amount paid is towards acquiring their entitlement to take on lease the land required for putting up a State of the art Ultra High Purity Cryogenic Liquid Medical and Industrial Oxygen Plant. The land is acquired in the course of business and by definition business under GST (section 2(17) of the Act), includes services in connection with the commencement of business, therefore the transaction is in the course or furtherance of business. The applicant is a registered person and therefore is entitled to avail credit of the supplies received by them in the course or furtherance of business as per Section 16(1) of the Act. The applicant has stated that as the Air Separation Unit (ASU) which is put up on the land leased is a Plant and Machinery , the restriction at Section 17(5)(d) is not applicable in respect of the goods and services used for the construction of such Plant and Machinery. 7.5 Section 17(5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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