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2020 (10) TMI 1313 - AAAR - GSTInput Tax Credit - GST paid on goods and services used for laying of cross-country pipeline nearby river till the boundary wall of the Factory - Operation and Maintenance Services (O & M Services) obtained by the Appellant for the maintenance of the facility - outward supply or not - HELD THAT:- “Works contract” has been defined under section 2(119) of the CGST Act, 2017 as a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning 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 - the explanation to section 17 (5) of CGST Act, 2017 categorically excludes pipelines laid outside the factory premises from the scope of plant and machinery, besides restricting 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. The essential character of “immovable property”, relevant to the present context is that it is attached to the earth, or permanently fastened to anything attached to the earth, or forming part of the land and not agreed to be severed before supply or under a contract of supply. The project of laying pipe lines covers a large area, tailored specifically to fit the dimensions and orientation of the needs of the project. Dismantling and shifting the said pipeline project appears neither to be prudent nor a viable option. Thus, besides pipelines being laid outside the factory premises outside the scope of “plant and machinery” it also fulfills the conditions of being an immovable property. Input tax credit on taxes paid on annual operation and maintenance services for the pipeline laid outside the factory premises - HELD THAT:- The appellant have also furnished a copy of certificate of licence to run a factory issued by the Government of Chhattisgarh to bring home their point of contention that these pipe lines (laid outside the factory) are 'factory' in itself. Perusal of the said certificate reveals that this licence has been granted by the Deputy chief Inspector of Factories, Government of Chhattisgarh for the very specific purpose of water treatment and pumping of water to the consumers by employing workers not more than nineteen on any one day during the year. This certificate in no way comes to their rescue for the claimed Input Tax Credit under the provisions of section 16 (1) of CGST Act 2017, in as much as the said certificate is for treatment of water and its pumping from the said source of water whereas Section 16(1) of CGST Act read with Section 17 (5) of CGST Act, 2017 specifically provides for restriction of input tax credit and the explanation appended under Section 17 excludes pipelines laid outside the factory premises from the definition of 'plant and machinery' thereby denying the input tax credit on the same. Under GST, Section 17(5) of CGST Act, 2017 provides for restriction of input tax credit and the explanation appended under Section 17 excludes telecommunication towers and pipelines laid outside the factory premises from the definition of 'plant and machinery' thereby denying the input tax credit - In terms of Section 2 (83) of CGST Act, 2017 “outward supply” in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance of business. No nexus whatsoever could be made of the “outward supply”, with the pipe lines laid outside the factory premises of Appellant for water supply on which ITC is being claimed. Appeal dismissed.
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