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2022 (2) TMI 1044 - AUTHORITY FOR ADVANCE RULING, RAJASTHANInput tax credit - inputs/capital goods - input services - Section 16 and 17 of the CGST/ RGST/ IGST Act - capital goods and inputs constitute plant and machinery of the Applicant which are used in the business of Manufacturing PP/HDPE Woven Sacks or not - blocked input tax credit under section 17(5) of the CGST/ RGST/ IGST Act or not? - HELD THAT:- Section 16 (1) of the CGST Act specifically provides that every registered person shall be entitled to take credit of the input tax charged on any supply of goods or services or both made to him, which are used or intended to be used in the course or furtherance of his business. Such entitlement is subject to fulfillment of certain conditions such as possession of invoice, receipt of goods/service, payment of tax to Government etc. as provided under Section 16(2) of the GST Act, 2017. However, the availability of credit is subject to the restrictions as stipulated under Section 17(5)(d) of the GST Act, 2017 - the restriction imposed herein is absolute in nature as it seeks to override Section 16(1) which entitles a registered taxpayer to avail credit on goods or services used or intended to be used in the course or furtherance of business. Irrespective of the fact that the goods or services are used for construction of immovable property which in turn will be used for conducting business, credit is not available; if the ownership of the property remains with the said person. In order to install/embed the said power plant at the roof top of its own building, there would be construction/erection of pillers on which the said plant is to be installed and certainly there would be lot of other civil work which support to construct the said plant. Such work can not be done without fasten and embed the part of said plant at roof top of the building - the roof top of the building is attached to earth and simultaneously plant to be fastened/embedded is attached to roof top. This results in 'permanently fastened to anything attached to the earth' as per Section 3(26) of the General Clauses Act, 1897. Further, for the purposes of clauses (c) and (d) of sub-section 5 of Section 17 of CGST Act, 2017, the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. Hence, the erection, commissioning and installation of the said power plant covers in expression of 'construction'. Whether the capital goods and inputs constitute plant and machinery of the Applicant? - HELD THAT:- The explanation to Section 17(5) provides “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 excludes,- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Solar Power Generating Plant of the applicant qualify as 'plant and machinery' as it falls under machinery - Although, construction of “Solar Power Generating Plant at rooftop of the building of applicant is an immovable property, however the said “Solar Power Generating Plant qualify as 'plant and machinery', hence it not covered under blocked credit as mentioned in 17(5)(d) of the CGST Act, 2017. Thus, the applicant is eligible for Input credit of Inputs, Capital goods and Services related to setting of Solar Power generator plant for captive consumption.
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