TaxTMI 
TaxTMI 
2018 (10) TMI 745
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....the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act" 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus - STATEMENT OF RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH ADVANCE RULING IS REQUIRED. 1. Background of operations: 1.1 The Applicant, a private limited company incorporated under the provisions of the Companies Act, 1956 holding GST registration number ('GSTIN') AADCN1920C1ZZ with effect from 1^st July 2017, is located at Plot No. E-1, MIDC, Kesurdi, Khandala, Taluka-Khandala, Dist. Satara-412 801. 1.2 The Applicant is engaged in the manufacturing of medical equipments such as dialyzers, blood tubing sets, arterial fistulas, syringes and needles. 1.3 The Applicant runs a manufacturing facility at Shirwal, Maharashtra.....
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.... following conditions need to be satisfied for the purpose of availing input tax credit: i. The recipient is in possession of a tax invoice or debit note issued by a registered supplier; ii. The recipient has received the goods or services or both; iii. The tax charged in respect of the supply has been paid to the Government; iv. The recipient has furnished statutory GST returns in terms of Section 39 of the CGST Act, 201 7; and v. The payment is made to supplier within 180 days from the date of issue of invoice. 1.3. In addition to the above, there are certain restrictions imposed on availment of input tax credit under Section 17 (5) of the CGST Act, 2017. Relevant extract of the provision is reproduced below for reference: "(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 supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; (d) goods or services or both received by ....
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....ion or structural support and used for making outward supplies. However, 'plant and machinery excludes land, building, or any other civil structures, telecommunication towers and pipelines laid outside the factory premises. Therefore, it is evident that input tax credit of 'plant and machinery', unless specifically excluded, is available when used for making outward supplies 1.7 The Applicant submits that none of the costs mentioned in Annexure 4 fall within the scope of exclusions specified under Explanation Il to Section 17 (5) of the CGST Act, 2017. Therefore the question that merits consideration is whether these 'plant and machinery can be said to have been used for making outward supplies. 1.8 The usage of plant and machinery for making outward supplies may be of the following 2 types: i. Directly used for making outward supplies i.e. having a direct nexus for making outward supplies; and ii. Indirectly used for making outward supplies i.e. having an indirect but essential nexus for making outward supplies. 1.9 The Applicant would like to submit that costs incurred for 'Mechanical Works' and 'Electrical Works' are indirectly used for making outward supplies i.e....
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....he ultimate production of goods that but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression "in the manufacture of goods." 9. In our judgment if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, by commercially inexpedient goods intended for use in the process or activity as specified in Rule 13 will qualify for special treatment. 12. .... in a factory manufacturing cotton and other textiles, certain electrical equipment in the present stage of development would be commercially necessary. For instance, without electric lighting it would be very difficult to carry on the business. Again electrical humidifiers, exhaust fans and similar electrical equipment would in the modern conditions of technological development normally be regarded as equipment necessary to effectually carry on the manufacturing process. We are not prepared to agree with the High Court that in order that "electrical equipment" should fall within the terms of Rule 13, i....
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....lication. On going through the Annexure-4 submitted by the applicant it appears that the 'Mechanical Works' mainly entails activities in the nature of Plumbing works, Fire Protection Works, Air Conditioning Works and the 'Electrical Works' mainly entails activities in the nature of Sub-station works, DG Set Works, Lighting Systems, etc. Basis the submission made by the applicant it appears that the Mechanical Works' and 'Electrical Works are indirectly associated with the course or furtherance of their business and are essential for carrying out manufacturing process. Therefore, it appears that the ITC in relation to works mentioned at Sr. No. 3 & 4 of Annexure -4 (Mechanical & Electrical Works) to the application is available to the applicant, in absence of any such restriction. The applicant has already agreed that no ITC is available in relation to civil works. As such it appears that there is no infirmity in the interpretation of the applicant. 04. HEARING The case was taken up for Preliminary hearing on dt. 28.032018 with respect to admission or rejection of present application when Ms. Aabha S Lekhak, Sh. Kanval Ashar and Mr. Shivraj Mhaske, Advocates along with Sh. ....
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....be incurred under the Extension Project can be broadly bifurcated into the following categories: i. Costs for Civil Works; ii. Cost for Mechanical Works; and iii. Costs for Electrical Works. The Applicant does not contest a claim to input tax credit on costs of civil works under the Extension Project. However, the provision u/s 17[5] (c) and 17(5) (d) Of CGST ACT also suggests that input tax credit would be available where such works contract services, goods and/or services are received for construction of an immovable property in the nature of plant and machinery. 4. Therefore, the present application for advance ruling is being filed to determine the eligibility of ITC in relation to costs proposed to be incurred for 'Mechanical Works' and 'Electrical Works' under the Extension Project. 'Mechanical Works' entails activities in the nature of Plumbing Works, Fire Protection Work, Air-Conditioning Works, etc and 'Electrical Works' entails activities in the nature of Sub station Work, D G Set Work, Lighting System Work, etc., A detailed break up of activities proposed to be undertaken in the nature of 'Mechanical Works' and 'Electrical Works' is provided in Annexure 4.....
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....l be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or ser....
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....r conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; (iii) rent-a-cab, life insurance and health insurance except where-- (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and (iv....
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....n possession of tax invoices, debit note or other prescribed tax paying documents. (b) Has received goods or services or both. (c) The tax charged in respect of such supply is actually paid. (d) He has furnished return under Section 39. (e) Where depreciation on tax component of cost of capital goods and plant and machinery is availed, the ITC on such tax component would not be allowed. (f) Would not be allowed to take credit after due dates as prescribed. We find that apart from conditions as laid down under Section 16 of the GST Act, Section 17 provides for restrictions and factual position and situations where ITC would not be available. The same are very clear from plain reading of Section 17 as referred and detailed above. Thus in view of the above factual position we find that at the time of the hearing we had requested the applicant that taking into consideration the specific contracts in execution of the project, they were required to clarify in detail their eligibility of input tax credit in respect of all sub heading under mechanical and electrical works as given in their ARA individually. We find that the applicant as per request above at the time....
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....l of sewage generated during the production process. Relevant extracts of the factories act 1948. Partly Admissible as per Section 17(1) of the GST Act 6 Internal Sewer and Venting System Yes The internal sewer and venting system is used for disposal of sewage generated during the production process. Relevant extracts of the factories act 1948. Admissible 7 Gardening Water Supply System Yes The gardening water supply system is used to supply water to the garden in the factory premises. Relevant extracts of the Maharashtra Factories Rules. 1963. Not admissible as not used in course or furtherance of business and as per restrictions in Section 17(5) of the GST Act. 8 Sanitary Ware and CP fittings Yes Before entering production floor, every worker is required to pass through a cleanroom where he is required to wear the appropriate protective gear and wash hands for sanitation purposes. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible 9 Dismantling Work No ___ ___ Not Admissible 10 Fire....
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....ction V and VI of Section 17 of the CGST Act. Admissible 22 Process Chilled Water Supply System The processed chilled water supply system is essential for supplying chilled water for production or product cooling process. In order to manufacture Hollow Fibres, constant supply of processed chilled water is required to maintain the specific temperature. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible 23 Purified Water Supply System The purified water supply system is essential for supplying purified water to be used in the production process. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible 24 N2 Supply System The nitrogen supply system is essential for supply of nitrogen necessary in the production process. Nitrogen (being an inert gas) is used as a blanket for isolating product from the atmosphere. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible 25 Process Waste Water Supply System The process waste water supply system i....
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....he Maharashtra Factories Rules. 1963. Admissible except for civil construction work if any. 33 Socket Outlet Work In order to maintain cleanliness on the production floor, socket outlets are an essential facility. Relevant extracts of the Maharashtra Factories Rules. 1963. Admissible except for civil construction work if any. 34 Telephone System Intercom and external communication systems is a basic necessity to facilitate communication within and outside the factory premises. Relevant extracts of the Maharashtra Factories Rules. 1963. Admissible except for civil construction work if any. 35 LAN System LAN connectivity of computers on production floor with main server used for configuring commands for operation of machines. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible except for civil construction work if any. 36 Fire Alarm System Fire alarm system for production floor. Relevant extracts of the Maharashtra Factories Rules. 1963. Admissible except for civil construction ....