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2019 (6) TMI 761 - AAR - GSTInput tax credit - existence of pipeline within factory or outside factory premises - goods and services used for construction of Tie-in pipeline, for delivery of re-gasified LNG from FSR U to the National Grid - whether they are eligible to avail ITC of GST paid on goods and services used for the construction of the pipelines? - HELD THAT:- The eligibility for taking input tax credit is dealt in the Sections 16 and 17 of the CGST Act. Section 16 states that a registered person shall be entitled to take ITC on goods and services used or intended used in the course or furtherance of his business and Section 17(5) of the CGST Act provides that in certain cases, input tax credit will not be available even if the goods or services are used in the course or furtherance of business. It is very clear from clause no. (iii) of the Explanation that credit is not available in respect of pipelines laid outside the factory premises. However, the applicant contended that, the pipelines that willbe constructed should not be seen as “pipelines outside the factory”, since the FSRU cannot be considered as a factory. To support their contention that the FSRU is not a factory, the applicant stating that the term “factory” is not defined under the CGST Act, has relied on dictionary meanings and brought out that it is essential to have ‘building’ for anything to be called a factory and since there is no ‘building’ in place there, the FRSU cannot be called a factory. In the subject case the FSRU is a place where there are workers who are working and the process that takes place there, is one of conversion of LNG to gaseous form. A pipeline cannot exist in vacuum without a factory. The expression “pipelines outside the factory” signifies that the pipeline is to transport some product from the factory to the end user. In the instant case the LNG, re-gasified in the ship, is transported through the pipeline which is outside the factory ship. Hence, we are of the view that the said pipeline is a “pipeline outside the factory”. Having found that the FRSU is a ‘factory’ and that the pipeline to be laid is ‘outside the factory’ and that the said pipeline does not qualify to be an ‘equipment, apparatus or machinery’ for the purpose of claiming ITC, the restriction on availment of ITC under Section and 17(5)(d) is applicable in the present case. The applicants are not eligible to avail ITC of GST paid on goods and services used for construction of Tie-in pipeline, for delivery of re-gasified LNG from FSRU to the National Grid.
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