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TMI Blog2023 (7) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... ding per se is not to be categorized as plant and machinery. The overhead crane and its proportionate structural support would be categorized as plant and machinery as per the explanation to Section 17 of the TNGST Act, 2017. Such structural support would not fall under the category of blocked input tax credit. Hence the appellant would be eligible for input tax credit proportionate to the extent of structural support erected in relation to overhead crane alone subject to fulfillment of conditions stipulated in section 17(5)(c) and (d) of the CGST Act, 2017 and explanation thereunder. However, they are not eligible for input tax credit relating to construction of other civil structure like side walls, roof of the Integrated factory building. - A.R. Appeal No. 04/2022 /AAAR, Order-in-Appeal No. AAAR/01/2023 (AR) - - - Dated:- 17-4-2023 - SH. MANDALIKA SRINIVAS, I.R.S., AND SH. DHEERAJ KUMAR, I.A.S., MEMBER (Passed by Tamil Nadu State Appellate Authority for Advance Ruling under Section 101 (1) of the Tamil Nadu Goods and Services Tax Act, 2017) PREAMBLE Represented by : Shri .V. Ravindran, Advocate 1. In terms of Section 102 of the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Works India Private Limited, (hereinafter referred as the Appellant), having their registered office at No. 150. Villarasampatti Naal Road, Nasiyanur Road, Villarasampatti, Erode, Tamil Nadu, 638 107. They are registered under GST with GSTIN 33AAICC4646F1ZT. The appeal is filed against the Order No. 12/ARA/2022 dated 31.03.2022 passed by the Tamil Nadu State Authority for Advance ruling on the application for advance ruling filed by the Appellant. 2. The Appellant has stated that they are in the process of completing the establishment of an Integrated Factory' Building to manufacture and supply generators for wind operated electricity generators (WOEG). The Integrated factory building that was being constructed, was a special kind of two-in-one building in the sense that it was not merely a conventional roofed factory building to protect the men, machineries and materials from rain and shine, but was a plant and machinery in itself due to its incrementally strong and large foundation, large numbers of pillars, 10 metres highly placed gantry beams with support mountings across the length and breadth, rails over the floor and beams for facilitating the overhead cranes to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y against the findings in para 8.1 and 8.2. and against decision in para 9 of the impugned advance ruling. In addition, the appellants is making the following specific response to the findings in Paras 6.1 to 7.4 of the impugned advance ruling, as per the table given below:- Para Ref. Gist of order Response to the findings in the impugned order, which is also the grounds of appeal. 6.1 of the impugned order Capturing of facts and ruling sought by the appellant. Facts in brief have been captured correctly, obtained reports from the jurisdictional officers and thereafter the application of the appellants was admitted for issue of advance ruling on merits ought not to have been disposed on in the manner it was done in the impugned order. [Last line of Para 6.1. of the impugned order refers.} 7.1. of the impugned order Capturing of facts again and rephrasing the issues to be decided by the ARA. Facts in brief have been captured correctly and the issues to be decided in the language of ARA are also more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by a taxable person for construction of an immovable property other than 'plant and machinery' . From the simple reading of the above provisions, it could be understood that the law presupposes a situation where plant and machinery [attached to the earth] could be one of the exceptions to expression immovable property . There is no definition cited from GST law for immovable property. Even though there is no discussion or findings in the impugned order on the definition of the expression immovable property as per General Clauses Act, it is clear that plant and machinery having been carved out of the definition of immovable properties, are eligible for ITC as per Sec. 17(5)(d). 5.5 This would leave a simple point to be decided in the present case as to whether ITC on goods or services or both which go into the making of the integrated factory building of the appellant and which is indisputably used as plant and machinery [without which the appellant cannot carry out their manufacturing activity] would come under the exception carved out under section (17) (5) (d). The ARA, for addressing the pertinent question, made only a bald observation in impugned order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d steel, cement, structures, pre-cast and other consumables for the purposes of constructing the integrated factory building. It is however immaterial as to whether the suppliers of these goods had billed separately as supply of goods with relevant HSN in their invoices or billed these goods as part of their works contract services, which Works Contract, for GST purposes, is supply of service. Thus the supply of goods cited above got merged with work contract service and this is why the contractor had billed all the items by citing SAC 9954. Further the table given under 7.3 of the impugned order, omitted to include the invoice No. 40/24.03.2021 of Arcons on the appellants, wherein the supply of goods under HSN 3402 and HSN 8414 are made. Nonetheless, in so far as the Teamage Builders Pvt. Ltd., the main contractor is concerned and whose bills alone were extracted in para 7.3. of the impugned order, the lack of separate invoices for supply of the goods (listed above), ipso facto, would not make any difference as the arrangement with the contractor was such that these items are meant to be worked upon and used in the foundation, gantry beams, precast and pillars. 5.11 The ARA hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Premises' designed to take the load of various 'Plant and Machinery' to be housed for operations. The incremental foundations made is not the 'foundation with which the Plant and Machinery are fixed to earth', which is held as eligible along with the 'Plant and Machinery' as per the Explanation under Section 17 of the GST Act. Also, the applicant has not established that they individually procures steel, cement and other consumables for the works executed by their suppliers, thus the invoices for such goods have not been established to be in the name of the applicant. Therefore, the credit of steel, cement and other consumables even in proportion to the incremental volume of the earth foundation, side walls, beams, etc. are not available as credit to the applicant. No ruling is extended on the 'Pre-cast, Reinforcements, supports' said to have been purchased as it is by the applicant and 'Other Capital goods' as the required facts of procurement and documentary substantiation is not made before us. (b) Applicant's factory was being constructed with concrete foundation. Earth work, foundation, plinth beams and tie beams are design ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts for the expansion works of identical nature. Advance ruling sought is therefore valid and it need not necessarily be supported by receipt of the inputs in the name of the appellant. (h) GST on WCS for construction of plant and machinery is not blocked under section 17. Just because, the construction serves the factory roof and sidewalls also, it cannot be said that incremental foundations (the increment is only to sustain the plant and machinery) made is not the 'foundation with which the Plant and Machinery are fixed to earth. Saying so is obviously contrary to fact. Otherwise, there was absolutely no need for the appellant to spend for reinforced structures. It is obviously and undeniably to enable the erection and operation of the plant and machinery only and nothing else. (i) The issue is only apportionment of the GST incidence on the WCS of which a basic portion is attributable to the factory walls and roof and the incremental engineering is purely for the plant and machinery. This issue is fairly captured in our submissions noted in paragraph 3.2 of the impugned order. The ARA too captured this fact and concluded fairly on facts that .....the applicant proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken that the structure being constructed is essentially for plant and machinery-the roof and sidewall load being incidental-the GST suffered on the entire WCS should qualify for ITC. Assuming for a moment that the plant and machinery in this case can operate in the open air, the appellant would be entitled to the whole of the ITC on the civil construction for plant and machinery. The appellant pleaded out of abundant caution for apportionment only to the extent of the incremental civil construction as applied for-excluding the basic structure strength normally required for sidewalls and roof of the factory. Therefore, the advance ruling be given as prayed for in the appeal, so that the appellant would be able to finalize their financial accounts, in so far as the capitalization of the capital goods are concerned, under IT provisions, consistent with the Advance Ruling that may be given herein. 7. Discussion and Findings: We have gone through the facts of the case, documents placed on record, Order of the Advance Ruling Authority submissions made by the appellant before this appellate forum. 7.1 The appellant has raised the following four issues praying to set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's contention that the Integrated factory building that constructed, was a special kind of two-in building in the sense that it was not merely a conventional roofed factory building to protect the men, machineries and materials from rain and shine, but was a plant and machinery in itself as its incrementally strong and large foundation, large numbers pillars, 10 metres highly placed gantry beams with support mountings across the length and breadth, rails over the floor and beams for facilitating the overhead cranes and these facilities built into the building make the entire building a plant and machinery to make the wind operated electricity generators (WOEG) needs examination. (ii) It is pertinent to refer the provisions of the CGST Act, 2017 relating to the input tax credit eligible for the plant and machinery in sub-section (5) of section 17 of the CGST Act, 2017 for which relevant provisions are extracted here for sake of convenience: (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) work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plant and Machinery. (v) According to section 95(a) of the CGST Act, 2017, advance ruling is in relation to the supply of goods or services or both, being undertaken or proposed to be undertaken by the appellant. The appellant filed copies of documents for procurement of works contract service before the Advance Ruling authority. Here, the provisions of section 95(a) read with section 97(2)(d) of the CGST Act. 2017 regarding, admissibility of input tax credit of tax paid or deemed to have been paid, answers the admissibility of the prayer for advance ruling sought by the appellant. 7.4 The contentions of the authorized representative of the appellant made at the time of virtual hearing and subsequent filing of additional grounds along with photo copies of the factory premises constructed are considered at great length. For the sake of convenience, the photo copies of the factory premises constructed taken from the visuals presented in a pen-drive by the Authorised Representative are reproduced below: 7.5 Examination of the above photographs and the averments made by the appellants would reveal that the factory premises have been constructed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... III under Sl.No. 327 of rate notification No. 1/2017 Central fax Rate. Chapter 84 deals with machinery and hence the overhead crane would fall under the category of plant and machinery. As per the Explanation under section 17 of the CGST Act, 2017. the expression Plant 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. Therefore, the structural support erected in relation to overhead crane alone would cover under the extended meaning of plant and machinery. 7.10 From the materials made available before us, the integrated factory building per se is not to be categorized as plant and machinery. The overhead crane and its proportionate structural support would be categorized as plant and machinery as per the explanation to Section 17 of the TNGST Act, 2017. Such structural support would not fall under the category of blocked input tax credit. Hence the appellant would be eligible for input tax credit proportionate to the extent of structural support erected in relation to overhead crane alone subject to fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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