2023 (5) TMI 920 - AAR - GST

Availment of ITC - 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 created mainly to protect machineries being supported by the said foundation - Steel [TMT bar] being procured by the applicant company and used while taking works contract services for making the said foundation to fix machineries to earth.

HELD THAT:- On examining the contention of the applicant, read with the certificate of the chartered engineer, a bare look at the photographs provided by the applicant when seen in conjunction to what is mentioned in section 17 ibid, which deals with apportionment of credit and blocked credits, we find that the law is unambiguous as far as ITC is concerned in respect of the P&M. ITC is not available in respect of works contract services when supplied for construction of an immovable property. Further, ITC is not available for goods, services or both received for construction of an immovable property even when used in the course or furtherance of business. However, the sub-clauses specifically exclude in both the cases, plant and machinery.

Sand Mill and Spray Dryer - HELD THAT:- On going through the two photographs, it is found 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'. Hence, the ITC in respect of this structure/shed is blocked in terms of section 17(5) of the CGST, 2017.

HAG (Hot Air Generating machine and equipment] - HELD THAT:- On going through the photograph, it is found that claim of ITC by the applicant in so far as the foundation and structural support in respect of the HAG is concerned is covered by the explanation 2 to Section 17(5) and 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 for the HAG machine only. The photograph clearly depicts that there is a roof overhead the machine. This roof and its supports would clearly fall within the ambit of civil structure and stands excluded from the expression 'plant and machinery'. Hence, the ITC in respect of this structure/shed [ie roof and its supports] is blocked in terms of section 17(5) of the CGST, 2017.

ETP [Effluent Treatment Plant] - HELD THAT:- On going through the four photographs, it is found that these are basically tanks which are civil structure. Now in terms of the discussion, expression 'plant and machinery' excludes civil structure. Therefore, when the ETP itself has been held to be a civil structure, the question of allowing ITC in respect of its foundation and structural support does not arise. Therefore the applicant is not eligible for the ITC in respect of the foundation made to install the ETP [effluent treatment plant].

The view as expressed is substantiated by the ruling in the case of 2019 (7) TMI 1736 - AUTHORITY FOR ADVANCE RULING, HARYANA, wherein it was held that it is clear that "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 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 - thus, the analogy of the water treatment plant, sewage treatment plant is applicable even to ETP.

Transformer - HELD THAT:- Following the ratio of the ruling in the case of IN RE: M/S. TARUN REALTORS PVT. LTD. [2020 (3) TMI 981 - APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA], it is held that the applicant is not eligible for ITC on works contract services taken for making foundation structure on which DG set is fixed to earth by foundation.