TMI Blog2021 (1) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... w relied upon by the appellant in the case of NORTH EASTERN RAILWAY ADMINISTRATION, GORAKHPUR VERSUS BHAGWAN DAS [ 2008 (4) TMI 544 - SUPREME COURT] wherein it has been held by the apex court that though the general rule is that ordinarily the appellate court should not travel outside the record of the lower court and additional evidence, whether oral or documentary is not admitted but Section 107 C.P.C., which carves out an exception to the general Rule, enables an appellate court to take additional evidence or to require such evidence to be taken subject to such conditions and imitations as may be prescribed. From the facts of the case and the relevant provisions as contained in the rule 112 as referred to above, the additional substantial evidences cannot be allowed to be relied upon at the appellate stage. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furtherance of business. The appeal filed by the appellant has no merit and rejected accordingly. - RAJ/AAAR/05/2020-21 - - - Dated:- 29-1-2021 - SH. PRAMOD KUMAR SINGH, AND SH. ABHISHEK BHAGOTIA, MEMBER Present for the Appellant : Sh. P. K. Sahu, Authorized Representative (Proceedings under Section 101 of the Central Goods and Services Tax Act, 2017 read with Section 101 of the Rajasthan Goods and Services Tax Act, 2017) At the outset, we would like to make it clear that the provisions of both the Central GST Act, 2017 and the Rajasthan GST Act, 2017 are same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central GST Act, 2017 would also mean a reference to the same provisions under Rajasthan GST Act, 2017. 2. The present appeal has been filed under Section 100 of the Central GST Act, 2017 (hereinafter also referred to as 'the CGST Act') read with Section 100 of the Rajasthan GST Act, 2017(hereinafter also referred to as 'the RGST Act') by M/s Indag Rubber Limited, SP 86-88, Industrial Area Bhiwadi, Bhiwadi, Alwar, Rajasthan 301019 (hereinafter also referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternal drainage, internal water supply, external sewage, external water supply, pumps, treatment station) v. Heating, ventilation and Air Conditioning ('HVAC') in Hanger Building, warehouse building and paint shop (variable refrigerant flow system, air handling system, air distribution system, piping, insulation, ventilation system and electrical works) vi. Electrical installations (11KV HT Panel, transformers, 11KV HT cable, bus duct, diesel generator, UPS, Battery charger cum DCDB, earthing, lighting protection, LT Cables, cable trays, wirings, distribution board, poles, fixtures fans, civil and miscellaneous works, fire alarm and public-address system, CCTV, voice, video data networking, LT Panels). 3.1 Appellant procures inputs and input services for undertaking work with respect to point no. iii. to vi. In respect of these inputs and input services, input tax credit is being availed by the Appellant. 3.2 The Appellant has entered into agreement with M/s Akanksha Contracts Pvt. Ltd. for supplying various goods and services for setting up the MRO facility on the Industrial Land. The Appellant issues purchase order on M/s Akanksha Contracts Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considers the complete written and oral submissions made by the Applicant. Thus, the same stands in violation of principle of natural justice. 6.1.2. It is pertinent to mention that one of the submissions of the Appellant was that it is covered by the judgment of Safari Retreats and thus, is eligible to take credit. Further, the Appellant made detailed additional submission regarding applicability of the principle of stare decisis. However, the Authority neither recorded nor considered submissions in this regard in the impugned ruling. 6.1.3. Further, the Appellant in order to substantiate its view, had relied on the advance ruling in the matter of In Re: K.P.H. Dream Cricket Pvt. Ltd., 2018 (18) GSTL 278 (AAR-GST), where the credit of input services was allowed to the applicant therein, for carrying out an output activity of supplying complimentary ticket as the same was taxable in nature. The Authority has not distinguished the principle laid down in this ruling. 6.1.4. It is submitted that being a quasi-judicial body deciding the rights and liabilities of the Appellant, the Authority is bound to follow the principles of natural justice. However, the Authority by not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealing with the question of selection under Indian Administrative Service/Indian Police Service (Appointment by Promotion Regulation) held that the expression reasons for the proposed supersession should not be mere rubber stamp reasons. Such reasons must disclose how mind was applied to the subject matter for a decision regardless of the fact whether such a decision is purely administrative or quasi-judicial. The Hon'ble Court held that the reasons in such context would mean the link between materials which are considered and the conclusions which are reached. Reasons must reveal a rational nexus between the two. 6.1.9. In this regard, reliance is also placed on the decision of the Hon'ble High Court in the case of Anil Products Limited vs. CCE, Ahmedabad-II reported at 2010 (257) E.L.T. 523 (Guj.), wherein the Hon'ble High Court has held that mere reproduction of submissions in the body of order is not enough but finding of deciding authority on these submissions is equally necessary. The Hon'ble High Court further held that the adjudicating / appellate authority must give its specific findings on various submissions made, judgments relied upon and the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The major intent behind GST is that wherever, the supplier is engaged in providing taxable supply, it should be given credit of the inputs and input services used by it for providing the said supply. 6.2.4. It is further submitted that the eligibility of credit is subject to fulfillment of conditions under Section 16(2) of the CGST Act. The relevant portion of Section 16 of the CGST Act is extracted below:- Section 16 - Eligibility and conditions for taking input tax credit. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 17(5) provides that goods and services received by taxable person for construction of an immovable property (except plant and machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. The relevant portion of Section 17 is extracted below for kind reference:- Section 17 - Apportionment of credit and blocked credits. (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. 6.2.7. In the light of objective and provisions under GST, it can be said that Section 17(5)(d) deals with unavailability of credit of inputs/input services in case where the output is not taxable. Thus, in case where the outward activity undertaken by an assessee is not taxable, the provision of Section 17(5)(d) will apply and credit will not be av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is eligible to claim credit of the tax charged by M/s Akanksha Contracts Pvt. while supplying the goods and services to the Appellant, on fulfillment of conditions enunciated under Section 16(2) of the CGST Act. 6.2.14. In this regard reliance is placed on the case of M/s Safari Retreats(Supra), wherein the credit has been allowed on goods and services procured for the construction of shopping malls and then letting out the same. Relevant portion of the judgment is extracted below for your kind reference: 19. The very purpose of the Act is to make the uniform provision for levy collection of tax, intra state supply of goods and services both central or State and to prevent multi taxation. Therefore, the contention which has been raised by the learned counsel for the petitioners keeping in mind the provisions of Section 16 (1)(2) where restriction has been put-forward by the legislation for claiming eligibility for input credit has been described in Section 16(1) and the benefit of apportionment is subject to Section 17(1) and (2). While considering the provisions of Section 17(5)(d), the narrow construction of Interpretation put-forward by the Department is frustrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntary tickets, as this act was taxable. It is pertinent to mention here that in this application, as the outward activity was taxable, credit was held to be available to the assessee/applicant. 6.2.18. On the basis of the aforementioned submissions, it is submitted that as the Appellant is engaged in the provision of renting of immovable property which is a taxable supply, the goods and services procured by it for making such supply are 'eligible for credit. 6.2.19 Further reliance in this regard is placed on the case of Oxford University Press v. Commissioner of Income Tax, (2001) 3 SCC 359, wherein purposeful interpretation of a statutory provision was validated. 6.2.20. Furthermore, in the case of K.P. Varghese v. Income-Tax Officer, Ernakulam and another, Vol.131 (1981) ITR 597, it has been observed that literal construction in certain cases leads to an absurd interpretation of a statutory provision and such practice is required to be avoided. 6.2.21. In the light of aforementioned submissions, it is submitted that in the view of the Appellant, the restriction under Section 17(5) (d) of the CGST Act is not applicable in cases where the inputs and input s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6.2.25. Moreover, in this regard it is also submitted that the Authority failed to analyze the transaction as a whole. It is submitted that the MRO facility is not merely created with an intent for construction of immovable property. It has been created keeping in mind the specifications given by Elcom with the objective to be given on lease to it. 6.2.26. Therefore, it is submitted that the Authority failed to appreciate the transaction as a whole and only based its findings on the basis of one limb of the transaction, ignoring the fact that the other limb is equally important to determine the taxability. 6.2.27. It is submitted that the Authority further clarified that if goods or services are used for the construction of an immovable property, the credit shall not be available, irrespective of the use of the said property, i.e in accordance with Section 17 (5) (d) of the CGST Act. In this regard, it is submitted that the Authority failed to provide any reason behind the said interpretation, i.e. the use of the said property shall not be an issue while deciding the eligibility of credit and application of the provision of Section 17 (5) (d) of the CGST Act. Further, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to respect the law laid down by a High Court, even if it is of a different State, so long as there is no contrary decision of any other High Court on that question. 6.3.5. Further, reliance in this regard is placed on the case of The Commissioner of Central Excise v. Valson Dyeing Bleaching and Printing Works, 2010 (259) ELT 33 (Bom.) wherein the Hon'ble High Court upheld the order of the Tribunal on the ground that it had merely followed a judgment of the Madras High Court as the same was binding on the Tribunal. It is submitted that further reliance is also placed on the case of Panipat Co-operative Sugar Mills Ltd. v. Commr. of Central Ex., Rohtak, 2013 (293) ELT 66 (Tri. - Del), wherein the judgment of 3 different High Courts on the similar question of law has been adopted by the CESTAT, New Delhi. It is submitted that in the above-referred case, there was no decision of the jurisdictional High Court on the issue being dealt by the Tribunal. In this background, the reliance was placed on the decision of 3 different high courts which were not the jurisdictional high courts in that case. Applying similar analogy, it is submitted that in the instant case as well, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst is put in jeopardy though it continues to be binding and effective between the parties unless it is a nullity or unless the Court may pass a specific order staying or suspending the operation or execution of the judgment, decree or order under challenge. 6.4.4. Further, reliance is placed on the judgment in case of Sanyogita Rane v. Manoramabai Rauji Rane, 2013 (7) ALLMR 633 (Bombay High Court), wherein the judgment was held to be effective since it has not been stayed by the Apex Court in subsequent proceedings. In this case, reference was made to Kunhayammed and others v/s. State of Kerala and another (supra). 6.4.5. Further, reliance can also be placed on the case of Tata Motors Ltd. v. The State of Jharkhand and Ors., 2008 (56) BLJR 2903 (Jharkhand High Court), wherein the Ld. Bench observed that mere pendency of Special Leave Petitions will not amount to stay the operation of the impugned judgment. 6.4.6. It is submitted that in the above case, the Tribunal followed the principle of judicial discipline and held that the judgments cited would squarely apply to the issue on hand as no stay order has been passed against them even if appealed before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation 4.2 Maintenance Hangar 4.3 Workshops 4.4 Repair laboratories 4.5 Logistics Warehouse 4.6 training Centre 4.7 Runway (In consultation with lAI/Malat) 4.8 Guide Simulator 6.5.3. In the month of April 2018 IAI team visited various sites for setting up MRO facility, including existing factory location of ELCOM in Mohali. Vacant portion of the appellant site at Bhiwadi was selected for construction of the MRO facility. IAI developed FRD (Facility Required Documents) as per the selected site, and the same was shared with ELCOM through email dated 13th June 2018 by Mr Rami Cohen of IAI. 6.5.4. IAI team visited ELCOM on 16-17 Jul 2018, to discuss FRD and other requirement of the MRO project. Subsequently ELCOM Team visited IAI, prepared a project report and submitted to RIICO for approval. 6.5.5. Post tie-up with the appellant for the construction, the following individual/ company was appointed to undertake the construction:- a) RSA Architects, Mr Swarandeep Singh - Owners Engineer b) CPKA - Project Management Consultancy, Architecture Engineering Design Consultancy 6.5.6. MRO: Facilities Under Construction: As per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from RPAs, hangar space will be utilised for repair/ upgrade of Ground Control Station Shelters. Hangar is designed for parking four fully assembled RPAs. Workshops of various parts of RPA are located in the Ground floor of Annex buildings, both side of the Hangar. Details of workshops being constructed in the Annex buildings are as under:- GSE Maintenance Shop Electrical Maintenance Shop Mechanical Maintenance Shop Structure and Composite Repair Shop General Store Trimming Room Inflammable Material Store Measuring Room Battery Room Propeller Calibration Room Carburetor Room Propeller Shop Engine Shop Tool Room Crew Room Server Room SAR Lab GCS Lab Wiring Shop 6.5.10. RPA will be brought to the MRO centre in a container (disassembled state) for repair/ overhaul/ upgrade. Various parts of the RPAs will be repaired/ tested in respective shops (as on required basis) and then the RPA will be assembled in the hangar for further repair/testing. Similarly, if painting is required, parts of RPA will be taken to the paint shop. In case any repair is carried out in the engine, it has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant has decided to let Elcom Systems Pvt. Ltd. operate its MRO facility from its vacant land at an industrial plot allotted to the appellant by RSIDC Ltd. Under the arrangement, the appellant has agreed to construct buildings as per the specifications given by ELCOM. ELCOM will do the finishing by installing machinery and equipment to complete the setting up of the MRO facility. The appellant would charge a monthly lease rent from ELCOM for the vacant land plus the buildings it would erect. The lease rent would be taxable under the GST laws. 6.6.2. Section 16 of the CGST Act permits registered person to take input credit in the prescribed manner. 6.6.3. GST paid by the appellant on input goods and services used for construction of the buildings would be allowable as input credit in terms of section 16. But this provision is subject to section 17, which prescribes circumstances in which certain input credits are blocked for utilisation in paying output tax. 6.6.4. The AAR has reached abrupt conclusion after quoting the law sub-section (5) of Section 17 of GST Act, 2017. Clearly, under section 17(5)(d), blocking of credit does not apply to plant or machinery. At the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases and a reference to three or four decisions, in our view, would suffice. The classic definition of 'plant' was given by Lindly, U. in Yarmouth v. France [1817] 19 QBD 647 a case in which it was decided that a cart-horse was plant within the meaning of section 1(1) of Employers' Liability Act, 1880. The relevant passage occurring runs thus: There is no definition of plant in the Act: but, in its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business - not his stock-in-trade which he buys or makes for sale; but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business , (p. 658) In other words, plant would include any article or object fixed or movable, live or dead, used by businessman for carrying on his business and It is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or Industrial business. In order to qualify as plant the article must have some degree of durability, as for Instance, In Hinton {Inspector of Taxes) v. Maden Ireland Ltd. [1960] 39 ITR 357 (HL) knives and last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant. The High Court affirmed that view. It said that a building used as a nursing home is not comparable with an ordinary building having regard to the number of persons using it, the manner of its use and the purpose for which it is used. The building was used not only to house patients and nurse them, but also to treat them, for which various kinds of equipment and instruments were installed. 3. The most apposite decision in this context is that delivered by the Allahabad High Court in S.K. Tulsi Sons v. CIT (1990) 90 CTR (AH) 99: (1991) 187 ITR 685 (AH): TC 29R.638. Reference was made to an earlier judgment, where also the functional test approved by this Court in several decisions was applied. It was held that if it was found that the building or structure constituted an apparatus or a tool of the taxpayer by means of which business activities were carried on, it amounted to a plant ; but where the structure played no part in the carrying on of these activities but merely constituted a place wherein they were carried on, the building could not be regarded as a plant. 6.6.9. In Asstt. CIT v. Victory Aqua Farm Ltd., (2015) 379 ITR 335 (SC), the Supreme Court ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated from the machinery and the machinery could not be worked without such special construction. He, therefore, allowed investment, allowance on the generating station, building, as claimed. The Tribunal affirmed this finding, as, as, indeed did the High Court. 6. We, therefore, have before us a finding of fact recorded by the fact finding authority that the generating station building is an integral part of the assessee's generating system. 7. Our attention has been drawn by learned Counsel for the Revenue to the judgment of this Court in Commissioner of Income Tax v. Anand Theatres 224 I.T.R. 192. He submits that, in that judgment, this Court has held that, except in exceptional cases, the building in which the plant is situated must be distinguished from the plant and that, therefore, the assessee's generating station building was not to be treated as a plant for the purposes of investment allowance. 8. It is difficult to read the judgment in the case of Anand Theatres so broadly. The question before the court was whether a building that was used as a hotel or a cinema theatre could be given depreciation on the basis that it was a plant and it was in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts - Annexure-I(2). These buildings are not simple housing, where some business activity will be carried out. The shapes of the building are carefully constructed, keeping in mind the equipment that would be fitted, and the operations carried out. 6.6.12. Engine Run-Up Test Bench:- The Engine Run-up Test Bench structure includes two rooms: engines run-in room and control room. Specific test equipment will be installed in this facility to test ROTAX -916, engines, post repair. However, test equipment alone is not sufficient for testing of the engine; the complete structure of the Engine Run-Up Test Bench is designed and constructed as integral part of this test set facility. A few specific provisions made in the building are as under:- (a) Inlet Air Opening: An Inlet air opening (1 m x 7 m) on the roof of the building has been provided for drawing fresh air for running of the engine (refer to Figure 3, Page 21 of FRD). (b) Outlet Air Opening: An outlet air opening with silencers,(dimensions: Height - 4.5 m, length- 3.5 m, complete rear wall area) has been provided (refer to Figure 3, Page 21 of FRD) (c) Ceiling Crane: A ceiling mounted, XYZ Crane, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree shops, i.e. Painting Preparation Shop, Painting Shop and Drying area. (b) Temperature and RH level in all shops are controlled as per the painting process requirements. (c) Cut out in the roof have been provide for inlet air and exhaust fans are mounted on the wall. (d) One wall of the Paint shop supports the Air Filter. Air from the paint shop is required to exhaust to the environment through these filters. Conventional paint booth could not be utilised for the MRO, due the typical shape and size of the parts of RPV, which will require painting. The complete structure of the Paint shop acts as a paint booth in the MRO facility. 6.6.15. The appellant is to construct several specialised buildings. These are not normal structure wherein any type of business activity can be carried on. These have been designed keeping in mind equipment that would be installed and MRO operations to be carried out. In the hangar, overhead crane is to be installed that can move in three dimensions in the hangar space, which is crucial for taking out and reinstalling engines in the drones. The heavy crane and operational attachments will be hung from the roof. For this reason, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court, in Purushottam Rambhao Khandwekar v. Gangadhar Mansingrao Wagh, 1986 SCC On Line Bom 303: 1987 Mah LJ 41, has decided a matter where the question was whether the lease was of the open land or of the land and the building which was constructed thereon for the use of the lessee. In that case, the lessee had agreed to construct a cinema theatre upon the site at the cost of Rs.50,000, the rent of which was fixed at Rs.6,000 per annum out of which Rs.1,200 was to be paid to the lessor and the balance to go towards payment of cost of construction of the theatre. After the lease period of 25 years, the lessee was to remove the machinery, equipment and furniture and hand over vacant possession of the premises to the lessor. The Court held that the lease was in respect of the open site only and the lessor was not a tenant in the building. 6.6.19. Courts have interpreted commercial arrangement not by the nomenclature given by the parties in the transaction document in appropriate circumstances. In Nai Bahu v. Lala Ramnarayan, (1978) 1 SCC 58 , the Supreme Court observed that, on the facts of that case, there was no intention to create a lease between the parties though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Supreme Court has explained that for used with the adaptive principle of a verb means for the purpose of . It connotes the end with reference to which anything is done. The goods and services mentioned in section 17(5)(c) (d) are those that help in the process of construction of an immovable property. In my view, the end result of construction is to be taken into account, and then decide whether the services provided to the appellant qualify or are blocked for input tax credit. From this prospective, all the activities that are undertaken to bringing into existence the entire MRO facility should be eligible for input tax credit. Accordingly, the appellant is entitled to take credit of GST paid by all the service providers involved in the process of setting up of the MRO facility. 6.7. The appellant is constructing the structures according to the specifications under the supervision of ELCOM. These are designed solely for the purpose of the operation of ELCOM. Since the appellant is not constructing the structures on its own account, the bar in section 17(5)(d) does not apply to such immovable property. 6.7.1 The appellant has lease-hold land from Rajasthan State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n period. The rent per month is Rs.54,00,000 in the first 3 years, Rs.60,48,000 in the next 3 years and Rs.67,73,760 in the last three years of the lock-in period. This gives a decent return of 20% p.m. A business having a profit of 12-15%, after all expenses, will be regarded as successful venture. 6.7.6. Since the appellant is getting enough return on the construction cost and lease rent of the open space and the construction is done as per the requirement of ELCOM and under its periodical supervision, it can be said that the appellant is not considering the immovable property on his own account but on account of ELCOM, for the construction of the buildings and facilities. 6.7.7. The true intention of the parties needs to be unraveled. ELCOM wanted to conduct MRO business. Such facility is not available for hire. It does not have a plot of land. If only it can get a plot of land on lease, it can construct the building and facilities that suits the business plan. But that has to be long term plan, so that investment on construction can be recovered within the period of lease. ELCOM has found the appellant's land suitable and the latter is willing to give 9-year non-cance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xecution, ELCOM and its client, IAI, were involved in directing the appellant to undertake construction activities as per their requirements. A meeting was held between the appellant, CPKA and ELCOM at INDAG office on 20thDec 2018, to formalise the contract with CPKA for Design, development and PMC of the MRO Project. Para 3 of the minutes specifies that the Project Report Submitted to RIICO is based on Facility Required Documents (FRD).It was clarified to CPKA that design and development of the MRO infrastructure has to be as per FRD. FRD is the document provided by IAI which lays down the complete infrastructure requirement for MRO of RPVs. 6.7.12. Email dated 12 Jan 2019 is from Mr Swarandeep Singh to Mr Rami Cohen, regarding submission of all drawings developed by CPKA to IAI for vetting. All construction drawings made by CPKA are as per FRD were approved by IAI with necessary amendments. Team of experts from IAI visited India on 14-15 Jan 2019 for necessary coordination with ELCOM, INDAG and CPKA. Email from Mr Swarandeep Singh regarding Predesign Submission of drawings to IAI is enclosed. This is further evidence about the involvement of IAI team in the development of MRO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Series of emails from Mr Rami Cohen in Dec 2019 and Jan 2020 towards vetting and approval of electrical drawing. Requirement of power connections sockets (including numbers and rating) were laid down by IAI. Complete details of data connections were also specified. This set of emails prove that electrical drawings of each rooms were vetted and approved by IAI. Email from Mr Rami Cohen dated 18 Feb 2020 gives the requirement of additional windows and revised specification of CPA. 6.7.18. Apart from the vetting and approval of the drawings and regular coordination through conference call, IAI team made multiple visits to India. Agenda of a few visits of IAI team to India for MRO project are enclosed for the following visits:- 1. Agenda IAI team visit 14 - 15 Jan 2019 2. Agenda IAI team visit 30 Apr 2019 3. Agenda IAI team visit 05 - 06 Aug 2019 4. Agenda IAI team visit 04 - 05 Nov 2019 5. Agenda IAI team visit 03 - 05 Feb 2020 Agenda of various visits of IAI team to India for MRO project establishes involvement of Mr Rami Cohen and his team during the entire period of design, development and construction of MRO facility at Bhiwadi. IAI has guided the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority wanted to know from the learned counsel of the appellant as to whether substantial evidences can be adduced at the appellate stage, for which he had no immediate reply; but informed that the same would be submitted shortly. The learned counsel submitted the several case laws in support for adducing substantial evidences at the appellate stage; some of which are as under:- i. North Eastern Railway Administration, Gorakhpur vs. Bhagwan Das, 2012 (281) ELT 161 (SC) 12. Though the general rule is that ordinarily the appellate court should not travel outside the record of the lower court and additional evidence, whether oral or documentary is not admitted but Section 107 C.P.C., which carves out an exception to the general Rule, enables an appellate court to take additional evidence or to require such evidence to be taken subject to such conditions and imitations as may be prescribed. These conditions are prescribed under order 41 Rule 27 C.P.C. Nevertheless, the additional evidence can be admitted only when the circumstances as stipulated in the said Rule are found to exist. The circumstances under which additional evidence can be adduced are:- (i) the court fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents, etc were given on 04.11.2020. As such, the appeal should be decided within 90 days from 04.11.2020 i.e 01.02.2021. 8.2 From the facts of the case, it would emerge that the appellant was approached by Elcom for taking MRO facility on lease. According to the agreement made between them, the appellant will construct MRO facility at Bhiwadi as per the specifications given by the later. The said MRO facility will thereafter be given on lease to Elcom by the appellant. Elcom will install its equipments in the MRO facility and will render MRO services to Israel Aerospace Industries. These facts clearly demonstrate that the appellant would continue to be the owner of the MRO facility and construction is carried out by them through the contractor selected by them, though specifications may have been given by a third entity. 8.3 In order to get the said facility constructed by the appellant on the industrial land by they have entered into agreement with M/s Akanksha Contracts Pvt Ltd for supply of various goods and services who, in turn, would raise a consolidate invoice for each month, which will include value of both goods and services so supplied along with applicable r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... room and p shop (pages 2, 55 to 56) g. Copy of lay out plans (pages 27, 57 to 83) h.Copy of FRD for MRO (pages 72, 84-157) i. Copy of Agreement dated 21.10.2020 (pages 18 186 to 203) j. Copy of email, minutes and other (pages 28, 158 to 185) 8.6.3 As we proceed further, it becomes incumbent on our part to bring out the legal position as exist on date regarding production of substantial additional documents at the appellate stage. The provisions of relevant Rule 112 of the CGST Rules 2017 is reproduced below- 112. Production of additional evidence before the Appellate Authority or the Appellate Tribunal.-( 1) The appellant shall not be allowed to produce before the Appellate Authority or the Appellate Tribunal any evidence, whether oral or documentary, other than the evidence produced by him during the course of the proceedings before the adjudicating authority or, as the case may be, the Appellate Authority except In the following circumstances, namely:- (a) where the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, the additional substantial evidences cannot be allowed to be relied upon at the appellate stage. 8.7 Before we delve deep to decide the case, it would be proper in the fitment of justice to discuss the relevant provisions of the statute which are as under- Section 16 (1) and (2) of the CGST Act Eligibility and conditions for taking input tax credit. 16.(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed; (b) he bas received the goods or servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse 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. The legislature, in his wisdom, think it proper to stop the flow of seamless credit once immovable property comes into existence and the ownership is fixed. 8.11 Let us put the issue in proper perspective. Generally, credit is available to the developers who are engaged in construction of immovable property because they are not engaged in construction on their own account but on behalf of others as the constructed portion / super-structure belongs to the buyer with whom agreement has been entered into. In such cases, the transaction completed before receipt of completion certificate and, therefore, tax on construction service is payable. In this case, credit on goods and services which went into such construction is admissible and can be utilized for payment of tax on construction service. If the developer constructs the immovable property on his own account, he would either use it for his own consumption wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word 'includes' is used after the term construction . As per the principle of interpretation of law laid down by the higher judiciary, the definition using the term 'means' has to be strictly construed to mean only what is stated therein, nothing more, nothing less. Our above view finds support from the judgment of Kerala High Court in the case of Kerala Public Service ... vs State Information Commission dated 9 March, 2011 wherein the Hon'ble High Court has observed as under,- --- The Honorable Supreme Court stated in Hariprasad Shivshanker Shukla v. A.D. Divelkar [AIR 1957 SC 121], that There is no doubt that when the Act itself provides a dictionary for the words used, we must look into that dictionary first for an interpretation of the words used in the statute. We are not concerned with any presumed intention of the legislature; our task is to get at the intention as expressed in the statute. When the statutory provision defining a particular term says that the said term shall mean what is stated in that definition clause, it shall mean only that; nothing more, nothing less; for the purpose of the statute which carries that definition. When a statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Legislature as disclosed from the context. As stated by Scrutton L.J, You do sometimes read 'or' as 'and' in a statute. But you do not do it unless you are obliged because 'or' does not generally mean 'and' and 'and' does not generally mean 'or'. Further as pointed out by Lord Halsbury, the reading of 'or' as 'and' is not to be resorted to, unless some other part of the same statute or the clear intention of it requires that to be done . Where provision is clear and unambiguous the word 'or' cannot be read as 'and' by applying the principle of reading down. But if the literal reading of the words produces an unintelligible or absurd result 'and' may be read for 'or' and 'or' for 'and' even though the result of so modifying the words is less favourable to the subject provided that the intention of the Legislature is otherwise quite clear, conversely if reading of 'and' and 'or' produces grammatical distortion and makes no sense of the portion following 'and', 'or' cannot be read in place of 'and'. The alternatives joined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se under supervision of service receiver cannot be construed to be on other's account and that the ownership of the property is transferred to the other person. We find no force in the contention of appellant that the appellant is not constructing the structures on its own account, therefore, construction of MRO facility fully covered in exclusion clause as stipulated in section 17(5)(d) of the CGST Act, 2017. 8.17 As discussed above, in view of specific exclusion mentioned under Section 17(5) (c) (d) of CGST Act, we conclude that ITC is not available for construction of an immovable property even when such goods or services or both are used in course or furtherance of business. 8.18 Lastly the appellant has stressed upon the judgment rendered by the Hon'ble High Court of Orissa in the case of M/s. Safari Retreats Pvt. Ltd., and Another v. Chief Commissioner of Central Goods Service Tax Others . The appellant has further submitted that the act of not following the Orissa High Court Judgment is a case of judicial indiscipline and it is final and valid. In this regard the appellant placed reliance on several other judgements. 8.19 It can be seen that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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