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TMI Blog2022 (12) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... ke it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT "A. Statement of the relevant facts having a bearing on the questions on which the Advance Ruling is required. 1. Mumbai Aviation Fuel Farm Facility Private Limited (MAFFFL) is having its registered office at Opp. ITC Maratha, Sahar Police Station Road, CSI Airport, Sahar, Andheri (E), Mumbai. 2. MAFFFL desires to create a modern and efficient aviation fuel facility to cater to the needs of airlines operating from CSIA. MAFFFL has undertaken the development of the Integrated Facility. "Integrated Facility" means the integrated aviation fuelling facility to be constructed and developed at the Integrated Facility Site, by modifying and upgrading the Existing Facilities, adding additional capacity and develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Connector Pipeline, 10% of the pipeline falls in the area licensed to MAFFFL and rest of pipeline length falls in the area which is outside the project sits. Provision of GST 1. Section 16 of the CGST Act deals with the eligibility of taking input tax? Credit ('ITC') and the conditions to be fulfilled by the registered person. Section 16(1), inter alia, states that a registered person shall be entitled to take ITC on goods and services used or intended to be used in the course or furtherance of his business. Section 16(1) is reproduced her under for ready reference: "16. (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 sued or intended to be used in the course or furtherance or his business and the said amount shall be credited to the electronic credit ledger of such person" ...emphasis supplied 2. Further, Section 17(5) of the CGST Act provides that in certain cases, input tax credit will not be available even if the goods or services are used in the course of further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Outcome on of Orissa High Court, Cuttack; Dated 17th April 2019 of the Write Petition filed by M/s Safari Retreats Private Limited V/s Chief Commissioner of the GST Department. It is gives support to calming of ITC received for any immovable property constructed for Furtherance of Business. The Delhi High Court has also issued a notice to the Department on a similar matter. 8. Under the aforesaid peculiar circumstances, we request for Advance Ruling regarding the availability of ITC of GST paid on goods and services used for construction of connector hydrant pipeline. B. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS 1. The GST Law brought with it a fresh tax rate structure and the availability of additional input tax credit. Section 17(5) of the CGST Act, 2017 and the respective state GST Acts have led to a paradoxical situation by denying credits as the objective of the GST is free flow of credits when the output is in the course or furtherance of business. Many hotels, malls and real estate and infrastructure renting companies have been denied input tax credit on construction services under the GST mechanism. 2. Writ, petition filed before O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the interpretation adopted by the Revenue is frustrating the objective of the CGST and other respective state GST Acts in as much as the petitioner in that case has to pay huge amount without any basis, Relying on (1999) 2 SCC 361, the very purpose of the credit is to give benefit to the assessee. Therefore, if the Petitioner is required to pay GST on the rental income arising out of the investment on which he had paid GST, it is required to have the input tax credit on the GST. 5. Delhi High Court has also issued notice to Revenue in similar matter. a. On the same lines, the Delhi High Court issued notice to Revenue while hearing Petitioner's challenge to section 17 (5)(c) & (d) of the CGST Act pertaining to blocked credit for hotels. The revenue in this case denied input tax credit on procurement of goods and services including works contract used for immovable property construction. This petition was filed seeking to declare section 17 (5) of the CGST Act, 2017 to be ultra-vires of Article 14 of the Constitution of India, as same is violating its fundamental right. The petitioner has also requested for formation of High-Level Committee for addressing interpretational i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the help of Fuel Hydrant System, the fuel is supplied to the airlines. The Connector Pipeline Laying and Associated works for man integral part of Fuel Hydrant System and without this, the fuelling to the airlines cannot take place. * The Fuel Hydrant system at MAFFFL is in a loop configuration with both ends of the loop with in the Licensed MAFFFL's premises. * There are multiple points in the loop of the fuel hydrant system where branches and pit valves are installed from where fuel can be withdrawn and filled into aircraft by mobile machinery called dispensers. The tanks, pumps, electrical and automation facilities as well as part of the hydrant system is housed with the premises of MAFFFL, which is leased from MIAL, whereas the balance hydrant system is located within the airport. * MAFFFL owns the whole system including the tanks and the Fuel Hydrant System with the connector pipelines. This system constitutes the entire setoff plant and machinery required to complete the sales of ATF to the aircraft. * The entire system, is installed underground, or on foundations etc. and is immovable in nature. For laying connector pipeline up to airside, the specific approval i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic protection for protection during construction v) The connector pipeline is not a separate pipeline laid outside the premises terminating outside the premises but is in the fact an extension of the pipeline outside the MAFFFL premises which is necessary to complete the delivery of the fuel to the aircraft and is part of Integrated Facility. Comments:- * Mumbai Aviation Fuel Farm Facility Pvt. Ltd. Is a joint venture formed by MIAL and oil PSU's ie. I.O.C.L., B.P.C.L and H.P.C.L. * MAFFFL is in the business providing fuel infra service wherein the fuel is stored in the stored tanks and with the help of Fuel Hydrant system it is supplied to the airlines. * Applicant has claimed the Input Tax credit on the inputs consumed in the construction of connector pipelines which connects the storage tanks to the refueller which forms the part of the plant and machinery but the said pipelines are situated outside the licensed area of MAFFFL. * Whereas the Section 17(5) of MGST Act, 2017 provides as under A) ................... B) ................... c) works contract services when supplied for construction of an immovable property [other than plant and machinery] except w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Tax Consultant. The Jurisdictional officer Shri Sanjay Nikam, learned Deputy Commissioner, MUM-VAT-E-620, LTU-2 was present. The Authorized Representatives made oral submission with respect to admission of their application. The application was admitted for further process. The application was admitted and called for final hearing on 31.05.2022 and on 20/10/2022. The applicant was represented by Authorized Representatives Shri. Debashish Goswami, learned CEO, Smt. Simmi Gugnani, learned CFO, and Shri Shailesh Kaushik, learned Tax Consultant. They attended the online hearing and made oral and written submissions alongwith online presentation. The Jurisdictional Officer Shri Rajendrda Pednekar, learned Dy Commissioner (in charge) also attended and later filed the written submissions as above. We have heard both the sides. 05. OBSERVATIONS AND FINDINGS: 5.1 The applicant MAFFFL is in the business of providing fuel infra service wherein the ATF of Oil PSUs is stored in the storage tank. The applicant is setting up Connector Pipeline for Fuel Hydrant System at CSIA, Mumbai. With the help of Fuel Hydrant System, the fuel is supplied to the airlines. The applicant contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion towers; and iii. Pipelines laid outside the factory premises." ....... Emphasis supplied 5.3 Thus, it is clear that as per the explanation to Section 17, Plant and Machinery does not include a pipeline laid outside the factory premises. As a consequence, the ITC of goods and services used for construction of a pipeline laid outside the factory premises is not available in terms of Section 17(5) (c) and 17(5) (d) of the GST Act. 5.4 As per the applicant, connector pipeline connecting the storage tanks to the refueller, which is immovable in nature, forms Plant and Machinery, which contention does not hold merit. Their key activity is providing the services, for supply to aircraft, which inter alia includes delivery in a form and manner which is consumable, usable and saleable. Hence, as per applicant, the provision of the ATF to the nearest practical delivery point i.e. refueller, is an integral and essential part of the economic activity being carried out by the applicant. Therefore, as per the applicant, the connector pipeline connecting the storage tanks to the refueller, which is immovable in nature, forms Plant and Machinery. Para 7 of the ARA application - FACTS AND C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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