TMI Blog2019 (7) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 - BOMBAY HIGH COURT] for the breakwater, to qualify for inclusion in the term plant , it must be established that it is impossible for the regasification plant to function without the breakwater. In the subject case the applicant s regasification plant is already functioning without the complete breakwater in place, as can be seen from their submissions. The applicant has not been able to establish that it is impossible for them to function without breakwater wall. Works contract services - whether predominantly earth work or not? - whether services of the works contract by the contractor is covered under item (vii) of serial No.3 of Table of the N/N. 11/2017-CentraI Tax (Rate) dated 28th June, 2017 as amended by N/N. 31/2017 - Central Tax (Rate) dated 13th October, 2017? - HELD THAT:- As per provision of section 95 of CGST ACT, this authority can give a ruling to the applicant on matters or questions raised, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant - Since the breakwater is going to be constructed by a contractor the supply, if any, in such a case will be undertaken by the contractor and not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean CGST Act and MGST Act. 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- 1. That, Dabhol Power Company (DPC) was incorporated by Enron Corp., USA for production of 2184 MW of electricity in Maharashtra (Dabhol Power Project) along with 5MMTPA integrated LNG Terminal. Enron, GE and Bechtel through their ultimate subsidiaries alongwith Maharashtra Power Development Corporation Limited (MPDCL) were the only four shareholders of DPC. 2. That, after the Enron Corp. filing Applications under the Bankruptcy Laws of USA, DPC was abandoned by Enron, GE and Bechtel. 3. That, Empowered Group of Ministers constituted by Government of India took the step for revival of DPC. 4. That, in meeting held on 11.11.2004 chaired by Cabinet Secretary, GOI towards formation of Project SPV in which GAIL, NTPC and Lenders to contribute ₹ 500 crore each towards equity of the same. 5. That, Ratnagiri Gas and Power Private Limited (RGPPL) was incorporated to take over inter-alia the Dabhol Power Project in July 2005. 6. That, by the order dated 22nd September, 2005 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the project as well as the dire need of power in the state of Maharashtra, the Union Government formed an Empowered Group of Ministers (EGOM) to examine the issues related to erstwhile Dabhol Power project in the year 2004. The EGOM in its meetings held on 08.08.2005 considered the restructuring plan and the recommendations of the EGOM were considered by the CCEA in its meeting held on 11.08.2005. Pursuant to the CCEA approval in its meeting held on 11.08.2005, Ministry of Power vide OM dated 23.08.2005 had conveyed the decisions of Government which inter-alia included the following: RGPPL to be made an inter-state project with minimum sale of 5% of the installed capacity outside Maharashtra. Ministry of Power (MOP) to accord Mega Power status to RGPPL upon completion of the project for the integrated facility, including the power plant and the LNG terminal. 10. That, RGPPL got its service tax registration number i.e. AADCR1375FST001 on 31.03.2006 and post GST, its GSTIN is 27AADCR1375F1ZG. 11. That, further the RGPPL demerged with the approval of NCLT and through the scheme of demerger the power plant is with the RGPPL whereas the LNG terminal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever the existing break water wall was not complete and requires immediate reconstruction in order to keep the jetty and cargo safe during the LNG unloading process. 18. That due to existing incomplete Break water wall, the NPSC provides only provisional clearances for the berthing and unloading of the LNG cargo and therefore does not allow the berthing of the cargo unless the height of the wave (swell) is less than 0.5 meters. 19. That, due to the above mentioned operational restriction, the jetty cannot work and therefore the existing break water wall: requires reconstruction and for this purpose, the applicant has invited the tender where the scope of work are as follows - Basic design, detail engineering and physical model test, surveys, temporary work , development of quarries, supply of material, construction of balance portion of break water and removal of temporary works as per the assessment reports, job specification, codes and recommendation of license holder and drawings. 20. That, with the given scope of work and the award of the work to various contractors, the services of the contractor will be covered under the services of work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T/CGST provision and the works contract service to be supplied by the contractor for the proposed reconstruction of the break water wall which is very much integral part of the existing jetty itself and very much required for the safety and increase of operational efficiency as it will help the jetty to function in all weather across the year. Thus the break water wall will be used for the furtherance of the business of the applicant. 2. Because it is not covered under the exclusion clause of section 17(5) of the GST Act as the works contract services are for the purpose of the construction of the plant and Machinery. 3. Because the applicant is not covered under exclusion clause of Section 17(5)(d) as the goods or services or both received by the applicant is construction of the plant or machinery in his own accounts and it is used for the course of furtherance of business of the applicant. 4. Because the term plant or Machinery has not been defined in the explanation to the section 17, The applicant has relied on the jurisdictional High Court ruling in the case of Mazagoan Dock Limited - reported in 191 ITR 460 = 1991 (3) TMI 114 - BOMBAY HIGH COUR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention that it is squarely covered in the item (vii) of the SN3 of the notification no 11/2017 Central Tax (Rate) dated 28th June, 2017 as amended by Notification No. 31/2017 - Central Tax (Rate) dated 13th October, 2017 3. To pass any other order as the Honourable Authority may deem fit. 3C. Additional submissions The rejoinder is as follows: 1. The Government of India has entrusted the task of reviving and restructuring of the Dabhol Project to GAIL and NTPC (both are Government of India Undertakings). GAIL and NTPC have formed a Joint Venture Company, named Ratnagiri Gas and Power Private Limited (RGPPL) to complete the balance of the works at the LNG Terminal and Power Plant, commission the same and thereafter, operate the facility. GAIL is managing after the balance of the works for the completion at the LNG Terminal. 2. RGPPL has engaged GAIL as the Owner s Engineer and in turn GAIL has appointed Engineers India Limited (EIL), as their primary Project Management Consultant (PMC) for PMC services for the completion and commissioning of the balance of the works of LNG Terminal. 3. Engineers India Ltd. (EIL) on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uipment. The term appliance in Law Lexicon has been defined as under: From the meanings by different dictionaries. it becomes clear that (1) an appliance is quite distinct from materials from which it is made, and (2) an appliance as an apparatus. device or instrument is means to an end These two aspects should be borne in mind while considering whether a particular article can be called an appliance. The first aspect seeks to take an integrated view of the article concerned and says that materials or component parts of an appliance should not be mistaken as tantamount to the appliance itself. The second aspect emphasizes the fact that the importance of an appliance consists in its utility to serve the object for which it is possessed. Para-16 of I.C.B (P) Ltd. v. Collector of Central Excise, Baroda - 1997 (95) E.L.T 239 (Tribunal) = 1997 (7) TMI 294 - CEGAT, NEW DELHI is also given below. 16. We also consider that they were not an apparatus, appliance or equipment. The apparatus is a compound instrument designed to carry out a specific function or for a particular use. In order to decide whether a particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s apparatus or equipment and it has to fixed to the earth by foundation of the rock amour of different sizes. 15. Therefore the breakwater is not covered with the term other civil structure as mentioned in the clause (i) of explanation to section 17(5). 16. Thus the construction of the breakwater service s which would be received by the KLPL is covered under the exclusion clause of section 17(5)(d) and therefore is eligible to avail the input credits in terms of section 16. 17. The KLPL submits that the in a recent case where the similar matter was argued before the Honourable High Court of Orissa, in the case of Safari Retreats Private limited VS CC CGST and others . = 2019 (5) TMI 1278 - ORISSA HIGH COURT (copy of the order enclosed), in a similar fact of the case, the Honorable court has read down the rigorous of section 17(5)(d) and has allowed the Input credit on the construction of an immovable property. The court has observed that if it is not read down it will become ultra-virus. 18. The KLPL submits that its case is on the same facts where the construction of breakwater will enable the KLPL to operate in all weather conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achinery 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 support but excludes: i) Land, Building or any other Civil Structure; ii) Telecommunication Towers; and iii) Pipelines laid outside the factory premises. From the above explanation it is clear that the dealer is covered under this section. And the proposed breakwater wall is a civil structure. 3) On the grounds of law at point no. 4 the applicant has further quoted a High Court ruling in the case of Mazgaon Dock Limited- reported in 191 ITR 460 = 1991 (3) TMI 114 - BOMBAY HIGH COURT , clarifying the term Plant and Machinery as has not been defined in the section 17 of the GST Act, In the said judgment Hon ble High Court has stated as follows, In order for a building or concrete structure to qualify for inclusion in the term plant , it must be established that it is impossible for the equipment to function without the particular type of structure. 4) At the point no. 5 the applicant has quoted a Supreme Court ruling in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was admitted and called for final hearing on 22.05.2019. Sh. Prakash Sinha, C.A., appeared, made oral written submissions. Jurisdictional Officer was not present. 06. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made by both, the applicant as well as the jurisdictional office. The applicant, having a LNG regasification plant at Dabhol, Maharashtra are engaged in the regasification of the LNG therein. The LNG which is the raw material reaches their plant through a jetty where it is unloaded from various cargoes. They have submitted that, adjacent to the jetty, there is an existing breakwater wall which is in an incomplete state of construction, which acts as a safety wall by preventing high waves and tides to touch the jetty and cargo/ ships of LNG and thus prevents damage to the ships due to high waves and water current. However the existing break water wall being incomplete requires reconstruction in order to keep the jetty and cargo safe during the LNG unloading process. Due to Break water wall being incomplete, for safety purposes berthing of the cargo of LNG is only permitted when the height of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the applicant can be considered to be Plant and Machinery . The applicant contends that although the break water is an immovable property, it is covered under the term Plant or Machinery since acropods which are used to construct the breakwater are interlocking devices fixed to the earth by foundation of the rock amour of different sizes are nothing but apparatus. We find that a breakwater is a barrier built out into the sea to protect a coast or harbour from the force of waves. Breakwaters reduce the intensity of wave action in inshore waters and thus reduces coastal erosion or provide safe harbourage to ships. The applicant has agreed that the breakwater is an immovable property. To find whether they are eligible to avail ITC of tax paid on the construction of such breakwater we need to find whether the same can be considered to be Plant and Machinery . We shall now consider the meaning of the expression Plant and Machinery by referring to the provision of Section 17(6) of the CGST Act. The explanation under Section 17 (6) is reproduced below:- Explanation : For the purposes of this Chapter and Chapter VI, the expression Plant and Machinery m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r submissions. The applicant has cited a couple of more judicial decisions but we find that the same have no relevance in the subject matter. The applicant has not been able to establish that it is impossible for them to function without breakwater wall. We now take up the second question for discussion. The same is reproduced as follows: Question No. 2 : Whether on the facts and circumstances of the case, as per the law and scope of work, the works contract services which the KLPL intends to procure is not predominantly earth work (that is, constituting more than 75 percent. of the value of the works contract) and the services of the works contract by the contractor is covered under item (vii) of serial No.3 of Table of the Notification No. 11/2017-CentraI Tax (Rate) dated 28th June, 2017 as amended by Notification No. 31/2017 - Central Tax (Rate) dated 13th October, 2017. Here the applicant s query is whether the services of the works contract by the contractor is covered under item (vii) of serial No.3 of Table of the Notification No. 11/2017-CentraI Tax (Rate) dated 28 th June, 2017 as amended. This authority is governed by the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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