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2019 (9) TMI 1444 - AAAR - GSTInput Tax Credit - civil and railway allied works in connection with the laying of private Railway Siding - signaling & telecommunication system, mechanical and structural works in relation to Railway Siding - execution of P-Way, Civil, overhead electrification, general electrical and signaling & telecommunication works for the proposed block station yard in relation to private Railway Siding - HELD THAT:- The instant contract consists of transfer of property in goods, coupled with supply of services which leads to the inevitable conclusion that this is a case of Works contract, covered under the definition of “Works contract” defined under Section 2(119) of the CGST Act, 2017 supra. Works contract, covers in its ambit only certain works performed on immovable property. The details of works as enumerated above and as forthcoming from the contract, goes to show that the said project of Private Railway siding awarded to the Contractor by the Appellant is not as simple or movable. The work consists of an entire system comprising of a variety of different structures which are installed after a lot of prior work which involves Civil work, Civil engineering, Ground work, supply, Foundation work, Fabrication, Erection of Building Steel Structures, sheds, Block cabin, Railway allied works, Signaling & telecommunication works, Construction of Railway Staff quarters, Station building etc.. The magnitude of project covers a large area, tailored specifically to fit the dimensions and orientation of the needs of the project. In no case it appears to be prudent or for that matter viable to move these items from one place to the other. Thus, the project of construction of Private Railway siding fulfills the conditions of it being an immovable property. Works contract, covers in its ambit only certain works performed on immovable property, we in affirmation with the findings of the AAR and more so with no visible intention to dismantle the said project of construction of private Railway siding, these being intended to be used for a fairly long period of time and on the basis of the scope of work itself as forthcoming from the documents supra issued by the Appellant M/s. NMDC, we come to the considered conclusion that the said project of private Railway siding, consists of civil structures with foundations and are immovable in nature. Whether credit of the taxes paid on various items will be eligible if the said laying of private railway siding satisfies the definition of “plant and machinery” and that the rail network, signaling system and other telecom network established can be regarded as an apparatus or an equipment. The test of immovable property is not relevant for plant and machinery as Section 17(5)(c) and (d) exclude plant and machinery from immovable property. Since, plant and machinery are excluded from immovable property, construction and other activity in relation to plant and machinery shall be eligible for Input Tax Credit unless otherwise restricted. The restriction of ITC is only on the telecom towers, pipelines which are not treated as plant and machinery by virtue of explanation to Sec. 17(5)(c) and (d). Input Tax Credit provisions restrict ITC credit of works contract services for works to be performed on immovable property and also restrict the credit of construction related activity of immovable property even when construction activity do not fall into the scope of works contract. However, works contract and construction activity is eligible for Input Tax Credit if done in respect of plant and machinery - Section 17(5)(c) and (d) would not apply if the expenditure is in relation to a Plant & Machinery. Plant and machinery has been specifically defined as any equipment, apparatus attached to earth by foundation or structural support used for supply of goods or services. Plant and machinery to specifically exclude telecom towers, pipelines etc. As per the definition of works contract, the works contract inter alia include construction 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 - Construction activity will not qualify as works contract if there is no transfer of property in goods involved i.e. the contractor is supplying service only without any supply of goods. Works contract may or may not be a construction. In the present case the project of laying a private railway siding consisting of a variety of different structures which are installed after a lot of prior work which involves Civil work, Civil engineering, Ground work, supply, Foundation work, Fabrication, Erection of Building Steel Structures, sheds, Block cabin, Railway allied works, Signaling & telecommunication works, Construction of Railway Staff quarters, Station building etc. will render such nexus tenuous. There is no merit in the appeal filed by the Appellant M/s. NMDC against the Advance Ruling Order passed by the AAR, Chhattisgarh and accordingly the said order is upheld.
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