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2020 (4) TMI 795 - AAAR - GSTInput Tax Credit - bunds/ crystallizer which are constructed and used in the manufacture of salt and bromine chemicals - Zero Rated Supply or not - AAR held that Input tax credit of GST paid on goods and services used to construct the “bunds” is admissible to M/s. Satyesh Brinechem Private Limited, provided that the bunds are used for making zero rated supplies and fulfill the conditions which are necessary for treating the bunds as “plant and machinery” - challenge to AAR decision. HELD THAT:- Since the salt would be exported, the same would be considered as ‘zero rated supply’ and object to the provisions of section 17(5) of the CGST Act, 2017, credit of input tax may be availed for making such zero rated supplies. In view of the provisions of section 16 of the IGST Act, 2017. Sub-section (5) of section 17 of the GST Acts starts with non-obstane clause and will have overriding effect on the provisions of Section 16(1) of the GST Acts. Therefore,’ if the goods and/ or services are covered under sub-section (5) of Section 17 of the GST Acts, the input tax credit Shall not (sic) be available - Also, credit of input tax may be availed for making zero rated supplies in view of the provisions of sub-section (2) of section 16 of the IGST Act, 2017. However, this provision in also subject to the provision of of sub-section (5) of section 17 of the CGST Act, 2017 - thus, the input-tax credit shall not be available on goods or services covered by sub-section (5) of section 17 of the GST Acts, even if the same are indispensible in the process of manufacture. Whether the goods and services used by the applicant for construction of “bunds” / “crystallizers” are covered under sub-section (5) of section 17 of the GST Acts or otherwise? - HELD THAT:- The ‘plant and machinery’ would be outside the purview of clauses (c) and (d) of Section 17(5) of the CGST Act, 2017 and would be eligible for input tax credit. Whether ‘bunds’ are ‘plant and machinery’? - HELD THAT:- As held by Hon’ble Apex Court in the case of COLLECTOR OF C. EX., CALCUTTA VERSUS ALNOORI TOBACCO PRODUCTS [2004 (7) TMI 91 - SUPREME COURT] circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases; that disposal of cases by blindly placing reliance on a decision is not proper - thus, ‘bund’ / crystallizer’ are not covered within the definition of ‘plant and machinery’ given under Section 17 of the GST Acts. Whether ‘bunds’ are ‘any other civil structure? - HELD THAT:- In the present case, the natural meaning of the phrase ‘any other civil structures’, as discussed herein above, is compatible with clauses (c) and (d) of Section 17(5) and definition of ‘plant and machinery’ given under Section 17 of the GST Acts. Even otherwise, the specific words ‘land’ and ‘building’ preceding general words ‘any other civil structures’ do not constitute a genus - Therefore, the bunds constructed by mixing chemical Terrazyme, GSB Metal, Water with dugged aud laying LDPE film wherever required, can be said to be covered under ‘any other civil structures’. Thus, Bunds are not ‘plant-and machinery within the definition of the said term under Section 17 of the GST Acts, and therefore, in view of clauses (c) and (d) of. Section 19(5) read with explanation below Section 17 of the GST Acts, Input Tax Credit in respect of works contract service or goods or services used in construction of ‘bunds’ is not admissible. Ruling of AAR modified.
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