TMI Blog2022 (12) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant, the provision of the ATF to the nearest practical delivery point i.e. refueller, is an integral and essential part of the economic activity being carried out by the applicant. Therefore, as per the applicant, the connector pipeline connecting the storage tanks to the refueller, which is immovable in nature, forms Plant and Machinery. The sole issue involved in the present case is regarding entitlement of ITC with regard to the said pipeline. The applicant has failed to establish how it is entitled to ITC in the presence of the express legal bar to claim such ITC. Apart from the entitlement of ITC, in respect of said 90% of the pipeline outside their premises, there is no other issue involved in the present case. - SHRI. M. RAMMOHAN RAO, AND SHRI. T. R. RAMNANI, MEMBER No. GST-ARA-126/2019-20/B-107 Mumbai, dt. 01/12/2022 PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Connector Pipeline Laying and Associated works form the important part of Fuel Hydrant System and without this activity, the fuelling to the airlines will not take place. 5 . Connector Pipeline Laying and Associated Works for Fuel Hydrant System at CSIA includes but not limited to performing all mechanical works related laying of connector pipelines from Integrated Fuel Farm facility to the existing Fuel Hydrant Network at CSIA including associated civil, electrical, instrumentation and cathodic protection works like construction of valve chambers, installation of valves, installation of actuators to all the valves in the existing Fuel hydrant network apart from the valves in the newly laid connector lines, Temporary Cathodic protection for protection during construction commissioning period, Permanent Cathodic protection commissioning assistance. 6. With the help of Fuel Hydrant System, the fuel is supplied to the airlines. The Connector pipeline laying and associated works from the important part of Fuel Hydrant System and without this activity, the filing to the airlines will not take place. The applicant is setting up Connector Pipeline for Fuel Hydrant System at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are used in the course or furtherance of business. Explanation .- For the purposes of this chapter and Chapter VI, the expression 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. ... Emphasis supplied 3. Thus, the restriction on availment of ITC under Section 17(5)(c) and. 17(5)(d) is not applicable in case where the goods or services ore used for construction of Plant and Machinery. However, as per the explanation to Section 17, Plant and Machinery does not includes a pipeline laid outside the factory premises. As a consequence, the ITC of goods and services used for construction of a pipeline laid down outside the factory would not be available in terms of Section 17(5) (c) and 17(5) (d), 4. The applicant's key activity is proving the services for supply to aircraft, which inter alia includes delivery in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner had accumulated input tax credit in respect of purchases of inputs and input services. It applied for availing credit, however, by applying section 17 (5) (d) of the CGST Act, the Revenue took a view that input tax credit shall not be available in respect of goods and services or both received by a taxable person for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the course of furtherance of business. The benefit of input tax credit was denied to the Petitioner. 4. Issues Involved: The key issue raised before the Court was,- a. Where inputs are consumed in the construction of an immovable property which is meant and intended to be for the provision of taxable output services, whether input tax credit was available to the assessee? b. Held; The Hon'ble Orissa High Court in Safari Retreats Private Limited V/s Chief Commissioner of Central Goods Service tax in W.P. (C) No. 20463 of 2018 vide order dated April 17 2019 read down section 17 (5) (d) of the CGST Act for the purpose of interpretation in continuation to give benefit to the person who has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availing credit and clarity to trade and industry and might facilitate in eliminating the unwarranted litigation on the issues in future. c. Since the Pipeline being constructed by MAFFFL is being used in the course or furtherance of business. The connector pipeline is not a separate pipeline laid outside the premises terminating outside the premises but is in fact an extension of the pipeline outside the MAFFFL premises which is necessary to complete the delivery of the fuel to the aircraft and is part of an Integrated Facility. d. Input credit of GST for laying pipeline work outside licensed area of MAFFFL should be admissible. e. To conclude we would like to mention that in our view the ITC on the capital expenditure incurred in laying the connector pipeline. Which has been hitherto reported as ineligible ITC in the GSTR3B return should be eligible for claiming ITC since final service provided by MAFFFL cannot be completed without the connector pipeline. 03. CONTENTION - AS PER THE CONCERNED OFFICER: Officers Submission Dated 16.06.2022, reads as under: SUBMISSION:- M/s Mumbai Aviation Fuel Farm Facility Pvt. Ltd. (MAFFFL) has submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int of supply at the wing tip of the aircraft cannot be completed. View above, the connector pipelines is to be considered as plant and machinery integral to the facility serving the aircraft fueling needs of Mumbai airport. Hence ITC on the GST paid on works done for entire connector line and be admissible to be assesse. Submission MAFFFL has not availed the ITC on the same in the cash ledger pending for final advance ruling hearing from the Hon. GST authority but has filed the same in the GSTR9 return in separate ledger for the FY 2019-20, 2020-21 and 2021-22. With this submission appellant has prayed for- The ITC on the GST paid on construction of the Connector pipeline should be allowed considering following:- i) Connector Pipeline is an integral part of the Fuel Hydrant system without which the sale at the wing tip of the aircraft cannot be completed ii) Though the spread of the pipeline (which is part of plant and machinery) is outside the MAFFFL's premises (MAFFFL's premises is not a factory), it is in a loop of hydrant system which both originates and terminates in MAFFFL's premises. iii) The final taxable supply of ATF to the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t referred to in sub section (1) and (2) may be attributed. Explanation - for the purposes of this Chapter and Chapter VI, the expression 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. Conclusion: The provision as per section 17 (6) of the MGST Act, 2017 it is pretty much clear that the expression means apparatus, equipment and machinery fixed to the earth by foundation or structural support that are used for making the out word supply of goods or services or both. In the present case applicant submits that the connector pipeline is not separate pipeline laid outside the premises terminating outside the premises but it is an extension of the pipeline outside the MAFFFL premises which is necessary to complete the delivery of the fuel. The above submission completes all the norms specified in the provision under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The area of project site is under the License Agreement with MIAL for which MAFFFL pays License Fee to MIAL. For laying connector pipeline up to airside, the specific approval is obtained from MIAL. The total length of connector line to be constructed is approx. 4 km. It is further specifically admitted by the applicant that (out of total pipeline work), if one takes the Total length of Connector Pipeline, the 10% of the pipeline falls in the area licensed to MAFFFL and the rest of pipeline length falls in the area which is outside the project. 5.2. The Section 16 of the CGST Act deals with the eligibility of taking input tax Credit ('ITC') and the conditions to be fulfilled by the registered person. The 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 of furtherance of business. The relevant portion of section 17(5) reads as under:- (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:- (c) works contract services when suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be construed that said only pipeline outside the licensed premises is forming part of plant and machinery. The legal provisions are very much clearly worded and unambiguous. At the time of final argument the applicant tried to argue that it is not factory , so the impugned clause is not applicable to it. However, what is important is the spirit of law and the facts of the case. So after considering the facts in totality and the legal provisions, we are of the view that there is no merit in such arguments. 5.5 The sole issue involved in the present case is regarding entitlement of ITC with regard to the said pipeline . The applicant has failed to establish how it is entitled to ITC in the presence of the express legal bar to claim such ITC. Apart from the entitlement of ITC, in respect of said 90% of the pipeline outside their premises, there is no other issue involved in the present case. Hence, the question is answered accordingly. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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