LNG jetties not 'plant & machinery' under CGST Act; Input tax credit denied

The LNG jetties proposed by the applicant were found not to qualify as 'plant and machinery' foundations under the CGST Act, 2017. As the jetties did not meet the definition of 'foundation' and were considered civil structures, the applicant was not eligible to avail input tax credit for GST paid on inputs, input services, and capital goods used in constructing the jetties. The ruling concluded that the applicant could not claim input tax credit under the relevant sections of the CGST Act, 2017.

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Issues Involved:
1. Whether the LNG jetties can be considered as 'plant and machinery' as foundation to equipment, apparatus, machinery under Section 17 of the CGST Act, 2017.
2. Whether the applicant can avail 'input tax credit' of GST paid on inputs, input services, and capital goods for building the LNG jetties under Section 16 read with Section 17 of the CGST Act, 2017.

Detailed Analysis:

Issue 1: Classification of LNG Jetties as 'Plant and Machinery'
Applicant's Argument:
- The applicant, M/s. Swan LNG Pvt. Ltd., entered into a Concession Agreement with the Gujarat Maritime Board (GMB) to develop, construct, operate, and maintain an LNG Port with a Floating Storage and Regasification Unit (FSRU) facility.
- The LNG jetties are designed to be foundations for plant and machinery used in regasification of LNG.
- The applicant referenced Section 16 and the Explanation to Section 17 of the CGST Act, 2017, arguing that the jetties qualify as 'foundation' for 'plant and machinery' and thus should be eligible for input tax credit.

Authority's Findings:
- The jetties are civil structures extending from the shore into the sea, primarily for installing plant and machinery for LNG regasification.
- Definitions of 'foundation' from various dictionaries indicate that a foundation must be a structure below the ground that supports buildings or structures above it.
- The jetties, being above the sea and stationed on pillars, do not meet the definition of 'foundation' as they are not below the ground.
- Therefore, the jetties cannot be classified as 'foundation' for 'plant and machinery' under Section 17 of the CGST Act, 2017.

Conclusion:
- The LNG jetties proposed by the applicant are not covered within the expression 'plant and machinery' as foundation to equipment, apparatus, or machinery.

Issue 2: Eligibility for Input Tax Credit
Applicant's Argument:
- The applicant sought to avail input tax credit for GST paid on inputs, input services, and capital goods used in building the LNG jetties.
- They argued that since the jetties are foundations for plant and machinery, they should be eligible for input tax credit under Section 16 read with Section 17 of the CGST Act, 2017.

Authority's Findings:
- The apparatus, equipment, and machinery proposed to be installed on the jetties do not meet the conditions required to be classified as 'plant and machinery' under the Explanation to Section 17 of the CGST Act, 2017.
- The jetties themselves are civil structures (immovable property), and input tax credit for construction of immovable property is restricted under Section 17(5)(c) and 17(5)(d) of the CGST Act, 2017.
- As the jetties are not covered under 'plant and machinery' and are considered civil structures, the applicant cannot avail input tax credit for GST paid on inputs, input services, and capital goods used in their construction.

Conclusion:
- The applicant cannot avail input tax credit of GST paid on inputs, input services, and capital goods for building the LNG jetties under Section 16 read with Section 17 of the CGST Act, 2017.

Ruling:
1. The LNG jetties proposed to be built by the applicant are not covered within the expression 'plant and machinery' as foundation to equipment, apparatus, machinery to be installed on it in terms of Section 17 of the CGST Act, 2017 read with GGST Act, 2017.
2. The applicant cannot avail 'input tax credit' of GST paid on inputs, input services, and capital goods procured for the purpose of building the LNG jetties in terms of Section 16 read with Section 17 of the CGST Act, 2017 read with GGST Act, 2017.

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