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TMI Blog2023 (5) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... The manufacturing process flow chart is provided as Annexure 1 to their application. For manufacturing Dyes, they require various plant and machinery [for short - 'P&M'], primary being Sand Mill and spray dyer and HAG machine. These machines are required to be fixed on earth by foundation or various structural supports which are of MS steel/foundation structure. 5. The applicant in his application has fairly admitted that the ITC on works contract utilized in Administration building and Warehouse would be treated as blocked credit. However, he is before us seeking a ruling on the eligibility of ITC on works contract services & material procured and utilized towards foundation for setting up of the following machineries * Sand mill and spray dryer * HAG plant * ETP as well as having tank farm and fire tank and * DG set. 6. In view of the foregoing, the applicant has filed this application seeking advance ruling on the below mentioned questions viz * Whether the applicant can avail ITC on [a] WCS taken for structure on which machineries are fixed to earth by foundation and services taken for setting up plant ie MS steel structure along with roof which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the advance ruling is sought. 11. Before adverting to the submissions made by the applicant, we would like to reproduce the relevant provisions, competing tariff entries, etc for ease of reference: Section 17. Apportionment of credit and blocked credits.- (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- [(a) motor vehicles for transportation of persons. (aa) vessels and aircraft except when they are used- (i) for making the following taxable supplies, namely:- (A) further supply of such vessels or aircraft: or (B) transportation of passengers: or (C) imparting training on navigating such vessels; or (D)) imparting training on flying such aircraft; (ii) for transportation of goods: (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa): Provided that the input tux credit in respect of such services shall he available- (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es; and (i) any tax paid in accordance with the provisions of sections 74, 129 and 130. Explanation.- For the purposes of this Chapter and Chapter Fl, 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 structural supports hut excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid ouitside the factory premises. 12. The applicant's primary contention while contending that they are eligible for ITC is that * the structure & building are independent & separate; * that the foundation is being built to support the P&M & other equipments; that it is to be installed on its deep foundation; * that the foundation is to make the plant immovable & hence the foundation does not amount to immovable property; * that for making outward supply of dyes [their finished product], raw material has to pass through different chemical process from one civil structure to another. 13. The applicant in respect of the four machinery, has stated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to earth is made as per load requirement & therefore 8 meters foundation has been created. * that there are load bearing pillars which travel upto foundation; * that around 28 meters vertical MS structural support and around 1895 square meters horizontal civil structural support is required to carry perpendicular load of machineries and equipments. * that the machineries and equipments cannot stand alone and cannot be operated without horizontal as well as vertical civil and steel structural support. * that the said structure is to be destroyed & demolished if the machineries and equipments are of no use. * HAG (Hot air Generating Machineries & Equipments * that customized structure is to be designed to hold the said machineries & equipments; * that there are heavy MS steel structure which can rest on strong support of foundation; * that around 10.2 meters vertical MS structural support is required to carry perpendicular load of machineries and equipments * that for maintaining temperature at consistent level & to protect if from weather fabricated roof is also required. * That the said structure is to be destroyed and demolished if the machineries and equip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herance of business. However, the sub-clauses specifically exclude in both the cases, plant and machinery. Noteworthy is fact that the second explanation which defines plant and machinery [for the purposes of chapter V and VI] to mean apparatus, equipment & machinery fixed to earth by foundation and structural support & explicitly includes such foundation and structural supports with exclusion of land, building & other civil structures. 19. We will now examine the claim one after the other in respect of each of the items viz 19.1 Sand Mill and Spray Dryer 19.1.1 On going through the two photographs we find that claim of ITC by the applicant in so far as the foundation and structural support for the Sand mill & Spray dryer is covered by the explanation 2 to Section 17(5) and hence, the applicant is eligible for the ITC provided it is not capitalized. However, the eligibility is only in respect of the foundation and the structural support. The photograph reveals a structure/shed, erected on the left side of the Sand mill and spray dryer. This structure/shed would clearly fall within the ambit of civil structure and stands excluded from the expression 'plant and machinery'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are used for making outward supply of goods or services or both and includes such foundation and structural supports but with some exclusions as above. In the present case the applicant admits that the Sewage Treatment Plant is attached with the civil structure of the building. Thus, it is clear that it is a part of the civil structure of the building and part of the building so constructed. Therefore the applicant's contention that the Sewage Treatment Plant is covered under the definition of "plant and machinery" is rejected because it is covered under the exclusion (i) of the explanation given above. 19.3.3 Our view is further substantiated by the ruling in the case of Tarun Realtors Pvt. Ltd. [2020 (35) GSTL 438(App. AAR-GST-Kar)] wherein under para 23 it was held as follows: 23. In respect of the Water treatment Plant and Sewage Treatment Plant, as can be seen from the photographs, they form part of the civil structure of the immovable property. Civil structures are specifically excluded from the definition of "Plant and machinery". So also, the DG Set and Transformer - they are procured as independent items and their installation becomes part of the civil structure of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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