TMI Blog2024 (3) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... ining Structures, Formation of Platforms for Landslide Facilities, and installation of Airfield Ground Lighting System, Visual Aids for Navigation and Bird Hazard Reduction System etc and the other being for construction of Passenger Terminal Building [PTB] with ATC, substations, installation of HVAC system, Plumbing, Fire Alarm, Fire Fighting System, CCTV, PA system, Flight Information Display system, Interior Design, internal and external finishing, Building internal access control system, Hydro pneumatic pumping system for buildings, STP, and rain water harvesting system etc. - the predominant and principal supply involved in both the contracts is construction of immovable property hence the contract cannot be artificially vivisected to consider it a contract for supply of various goods / services as contended by the applicant and the eligibility of input tax credit determined accordingly. The supply of goods/services are integral part of the overall contract for supply of works contract services for construction of immovable property and hence the entire input tax credit of tax paid on the works contract services as per the Running Bills of L T are not eligible being blocked cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has been registered under GST Act and availed input tax credit on the basis of the said invoices issued by the suppliers on certain specific services, listed below:- 1. Earth work in relation to runway and PTB 2. Airfield lighting and control systems 3. Runway earthwork 4. Runway road side pipe drain with chamber 5. Topographic survey for natural drain 6. Pipe culvert on runway 7. Runway electrical and lighting fittings works 8. Signages on the runway, pavement markings bird hazard reduction system 9. Signages on the PTB 10. Flooring work of PTB 11. Ceiling work/system of PTB 12. Partition work of PTB 13. Electrical equipments and fittings on PTB 14. Engineering consultancy fees on signages 15. Engineering consultancy fees office block 16. Consultancy fee interior design - PTB 17. Water supply system - PTB 18. Finishing plumbing works - PTB 19. Consultancy Fee - KITCO 20. Testing, certification, defect removal 21. Consultancy fees for project management consultancy 22. Plantation and landscaping 23. Site clearance 4.4. Section 2(119) of the CGST Act, 2017 defines Works Contract as follows; Works contract means a contract for building, construction, fabrication, completion, erect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble property. It means blocking of credit under clauses (c) and (d) will happen only in cases were the works contract services or other services and goods are received for construction of immovable property. Consequently, (a) If the works contract service is for any activity other than construction like fabrication, completion, erection, modification etc; blocking of credit as provided in the above clauses will not apply, (b) if the works contract service is not for construction but in relation to construction, means indirectly used to the construction of the immovable property, the credit will not get blocked under section 17(5) (c). 4.8. The word construction when used in the context of works contract can only mean one of the 14 activities included in the definition. In other words Section 17(5) (c) will not encompass the other 13 different activities specified in Section 2(119). The applicant relied on the observations of the Supreme Court in RBI Vs Peerless General Finance and Investment Company in AIR 1987, SC 1023- Interpretation must depend on the text and context as they are the bases of interpretation. One may well say if the text is the texture, context is what gives the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior design consultancy service, topographic surveys, landscaping etc are not covered under section 17(5)(c), since they are services received in relation to construction and not for construction. Therefore, the following items are not to be covered under Section 17(5) (c) credit blockage.- (a) Testing, certification, defect removal. (b) Engineering consultancy fees on signage. (c) Engineering consultancy fees office block. (d) Consultancy fees interior design -PTB. (e) Topographic survey for natural drain. 4.12. The Explanation to Section 17 defines plant and machinery as any apparatus, equipment or 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 support. Here it is clear that the apparatus, equipment or machinery when fixed to earth through a foundation or structural support only will fall under the definition. It means any apparatus, equipment or machinery that is fixed to a building or to something that is embedded to earth will not fall under this definition. Therefore, any apparatus, equipment or machinery fixed to earth will come under the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.2021 works out to 15 Crores approximately. 6. Personal Hearing: The applicant was granted opportunity for personal hearing on 19.04.2023 through Virtual Mode. Shri. Soman. N.L, Chartered Accountant represented the applicant. The applicant filed detailed statement of facts along with the application. He requested to issue the ruling on the basis of the submissions made by them in the application and during the personal hearing. 7. Discussion and Conclusion: 7.1. We have carefully examined the statement of facts and the oral submissions made during virtual hearing. The issue to be decided is the admissibility of input tax credit on services supplied by Larsen and Toubro Ltd in connection with the construction of runway and passenger terminal building of the applicant. 7.2. The questions on which advance ruling is sought by the applicant falls within the purview of clause (d) of sub-section (2) of Section 97 of the CGST Act, 2017; i.e; admissibility of input tax credit of tax paid or deemed to have been paid . Further there were no proceedings on the issue pending against the applicant as on the date of filing the application; i.e; 25.05.2020 and the Incident Report of the Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (h) Testing, certification, defect removal. (i) Engineering consultancy fees on signage. (j) Engineering consultancy fees office block. (k) Consultancy fees interior design -PTB. (l) Topographic survey for natural drain. 7.7. The applicant further contends that ITC of tax paid on the following goods/services are eligible as they are in respect of plant and machinery and hence excluded from the credit blocked under Section 17(5) (c) and (d) of the CGST Act. The goods/services listed are;- (a) Airfield lighting and control system. (b) Runway roadside pipe drain with champer. (c) Pipe culvert of runway. (d) Runway electrical and lighting fittings and works. (e) Signages on the runway, pavement markings and bird hazard reduction system. 7.8. The provisions of Section 17(5)(c) and 17(5)(d) of the CGST Act relate to blocking of ITC in relation to goods or services or both used for construction of immovable property. The provisions of both the said sub-sections are to be read along with the explanations given after section 17(5) (d) and section 17(6). The provisions of both clauses (c) and (d) are inter-linked to each other and are to be read conjointly. 7.9. The relevant provisions are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended by the applicant and the eligibility of input tax credit determined accordingly. 7.11. Therefore, the supply of goods/services in respect of the 12 activities listed at Para 7.6 above and the 5 activities listed at Para 7.7 above are integral part of the overall contract for supply of works contract services for construction of immovable property and hence the entire input tax credit of tax paid on the works contract services as per the Running Bills of L T are not eligible being blocked credit in terms of provisions of Section 17 (5) (c) of the CGST Act, 2017. In the light of the discussion as above, the following ruling is issued: RULING Question : Whether on the facts and circumstances of the transactions of the applicant, and the provisions of the GST Law relating to input tax credit, are there any ineligible credits that the applicant has taken in respect of certain supplies specifically listed in the statement of relevant facts in Annexure-1, which needs to be reversed. Answer : The applicant is not eligible for the input tax credit in respect of the tax paid on the supplies of goods/services received by them that are specifically listed in the Statement of Relevant Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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