AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 761
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.... except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGS T Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST 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 OUESTION(S) ON WHICH ADVANCE RULING IS REOUIRED. 1. M/s. Western Concessions Private Limited (formerly known as H-Energy Gateway Private Limited (hereinafter referred to as "the applicant") having its corporate head office at 12th Floor, Knowledge Park, Hiranandani Business Park, Powai, Mumbai, is, inter-alia, engaged in regasification of Liquified Natural Gas and delivering the same to customers. 2. The applicant has obtained registration and holding valid registration certificate issued under Central Goods and Services Tax Act, 2017 ("CGST Act"). 3. The applicant is setting up a Liquified Natural Gas (LNG) re-gasification project at Jaigarh port in the state of Maharashtra....
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....is supplied 12. Further, 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 or furtherance of business. The relevant portion of section 17(5) is extracted as under: "(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (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 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. 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 foun....
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.... available even if the goods or services are used in the course or furtherance of business. C.3 Clause (c) of section 17(5) restricts availability of ITC in respect of works contract service used for construction of immovable property, except in case where it is an input service for further supply of works contract service. Clause (d) of Section 17(5) bars ITC in respect of goods or service used for construction of immovable property on assessee's own account. C.4 However, the above restriction on availment of input tax credit will not apply if the immovable property constructed is plant and machinery. The term "plant and machinery" is defined in the explanation to section 17 as apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply but, inter alia, excludes pipelines laid outside the factory premises. C.5 In the present case, the applicant is constructing a Tie-in pipeline to deliver the re-gasified LNG to the cross-country pipeline/National Grid for further transportation to the customers. The said pipeline will be laid under the ground and the length of the pipeline would be approximately 60 KMs. C.6 ....
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....ment' - The articles or implements used for a specific purpose or activity 'Machine' - A devise or apparatus consisting of fixed or moving parts that works together to perform some function. - Also termed apparatus. D.2 Therefore, any instrument which is understood to be an apparatus, equipment or machine in common parlance and is permanently fixed to the earth by foundation and structural support which is used for making outward supply will be treated as "plant and machinery". D.3 The term equipment is defined in the dictionaries as a thing which is used for particular or special purpose. In the present case, the Tie-in pipeline is used for delivery of natural gas from the terminal to the cross-country pipeline. Thus, the pipeline is used for the specific purpose of delivery. Further, as stated above, the delivery of gas up to the cross-country pipeline is an integral and essential part of the services provided by the applicant. D.4 Thus, the Tie-in pipeline is used for making outward supply of re-gasification services by the applicant. Accordingly, the Tie-in pipeline will be treated as "plant and machinery". The exclusion clause in the Explanation to Section 17 i.e. "P....
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....: "The first question to be decided is what is a building? The ordinary or natural meaning to be assigned to the word 'building' is given in P. Ramanatha Aiyar's Law Lexicon (Reprint Edition 1987) at page 159, thus: "A thing composed of the fabric of the building and the ground that the fabric rests upon and encloses". It is further stated by the author that "the land upon which the walls of a stone or brick building rest, or, indeed, of any other kind of building which in law is considered as annexed to the soil, and which is not clearly severed therefrom by the terms of the deed itself, must be considered as part of the building itself. In Stroud's Judicial Dictionary (Vol. I. 5th Edn.), the word 'building' is defined thus: "What is a building must always be a question of degree and circumstances". In Black's Law Dictionary (5th Edn.), the meaning of the word building is given as follows: "A structure or edifice enclosing a space within its walls, and usually, but not necessarily, covered with a roof. In Bourvier's Law Dictionary (A Concise Encyclopedia of the Law Vol. 1.3rd Revision) the meaning of building is given as "an edifice, ere....
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....mises, and in order to be excluded from the definition of plant and machinery. the pipeline should be laid outside such factory premises. The wordings used in the Explan be read as it is and it cannot imply anything which is not expressly stated. A.1 Section 17(5) of the Central Goods and Services Tax Act, 2017 ("CGST Act"), inter alia, restricts the availability of ITC of GST paid on goods and services used for construction of immovable property. The relevant portion of the Section 17(5) is extracted as under: "(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (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 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: Explanation.-- For the purposes of thi....
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....57 = 1957 (4) TMI 46 - SUPREME COURT. The relevant portion of the said judgment is extracted as under- "....It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter..." A.6 Thus, the applicants submit that the exclusion clause 'pipelines laid outside the factory premises" has to be strictly interpreted. The aforesaid exclusion clause presupposes that there should be a factory premises, and in order to be excluded from the definition of plant and machinery, the pipeline should be laid outside such factory premises. A.7 The contrapositive of pipelines laid outside factory premises' is not that only pipelines lai....
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..... Land and its appurtenances. (v) Cambridge International Dictionary of English (in PI) the land and building owned by someone, esp. by a company or organization. (vi) The American Heritage Dictionary of English Language, III Edition 4. premises. a. Land and the building on it. b. A building or a part of building on it. (vii) Wharton's Law Lexicon. 1976 Reprint Ed premises' is often used as meaning 'land or houses'. (viii) Cochran's Law Lexicon, IV Edition 'Premises' means 'houses or lands'. (ix) Earl Jowitt, Dictionary of English Law Premises...from this use of the word, 'premises' has gradually acquired popular sense of land or buildings. Originally, it was only used in this sense by laymen, and it was never so used in well-drawn instruments, but it is now frequently found in instruments and in Acts of Parliament as meaning land or houses, e.g., the Public Health Act, 1875. Sec. 4, where 'premises' includes measures, buildings, lands, easements, tenements and hereditaments, of any tenure... (x) Ballentine J.A. Law Dictionary with Pronunciation II Edition 'Premises' - as applied to land, Webster's New International Dictionary defines the wo....
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....purpose 'Machine' - Any combination of mechanics for utilizing, modifying, applying, or transmitting energy, whether simple, as a lever and fulcrum, pulley, etc. or complex, as a Fourdrinier papermaking apparatus. Black's Law Dictionary 'Equipment' - The articles or implements used for a specific purpose or activity 'Machine' - A devise or apparatus consisting of fixed or moving parts that works together to perform some function. - Also termed apparatus. B.3 The applicants submit that the tie-line pipeline being constructed by the applicant is not merely a passive structure, but a machinery for transportation of gas from the FSRU to the national grid. B.4 In order to understand the nature of the Tie-pipeline line being constructed by the applicant, it is pertinent to understand the various components, equipment and devices forming part of the pipeline. i. Pipes - These comprises of the hollow pipes laid underground from the Jaigarh Terminal to the National grid. ii. High pressure Un-loading Arm - The high pressure unloading arm installed at the Jaigarh terminal is a special equipment for unloading the high pressure Gas from FSRU into the Tie-in Pipeline. ii....
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....and temperature of gas. xvi. Cathodic Protection System - This system is installed in pipeline for controlling the corrosion of pipeline. B.5 The aforesaid equipment and machineries allow the applicant to induct, control, manage and monitor the flow of gas in the tie-in pipeline and such equipment together comprise the tie-in pipeline, which acts a machinery for transportation of gas to national grid. B.6 Thus, the applicants submit that the tie-in pipeline qualifies as "plant and machinery' as defined under Explanation to Section 17(5) of the CGST Act. B.7 An exclusion clause of a definition can only exclude something which is already covered by the main body of the provision. Hence, the fact that pipelines laid outside factory premises' is excluded from the definition of "plant and machinery" itself means that such 'pipelines laid outside factory premises" would be otherwise covered under 'apparatus', 'equipment', or 'machinery' and hence qualify as 'plant and machinery' under explanation to Section 17(5). The Factories Act, 1948 is not applicable in the present case. The definition of factory given under The Factories Act, 1948 would not be applicable in the present c....
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....undertaken. As already stated in the submissions made in the preceding paragraph 'premises' can only mean either land or buildings comprising a factory. Hence, even if the definition given in Factories Act, 1948 is relied upon, the FSRU which is vessel would not qualify as a factory. 03. CONTENTION - AS PER THE CONCERNED OFFICER The jurisdictional office has not made any written submissions in the matter. 04. HEARING The Preliminary Hearing in the matter was held on 19.12.2018, Sh. Ms. Nupoor Agarwal, Advocate, Sh. kunal Nikumbh, C.A. and Kunal Hora, Sr. Manager Taxation, appeared and requested for admission of application as per contentions made in their application. Jurisdictional Officer Sh, B. S. Mangat J. C. Division -III, Navi Mumbai Commissionerate appeared but made no written submissions. The application was admitted and called for final hearing on 20.02.2019. Sh. V. Shridharan Sr. Advocate appeared made oral and written submissions. Jurisdictional Officer Sh. B. S. Mangat J. C. Division -III, Navi Mumbai Commissionerate appeared. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made by both, the applicant as well....
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.... 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 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: 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. It is very clear from clause no. (iii) of the Explanation that credit is not available in respect of pipelines laid outside the factory premises. However, the applicant contended that, the pipelines that willbe constructed should not be seen as "pipelines outside the factory"....
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....unning shed or a hotel, restaurant or eating place." It is clear from the above definition that a factory means any premises having workers who are involved in a manufacturing process. In the subject case the FSRU is a place where there are workers who are working and the process that takes place there, is one of conversion of LNG to gaseous form. Times and businesses are evolving regularly. Law evolves accordingly. In case of Porritts and Spencer (Asia) Ltd Vs. State of Haryana SC reported as 1979 AIR 300 = 1978 (9) TMI 72 - SUPREME COURT wherein court was dealing with the product out of new technology/ Invention etc. The Hon SC held as below: The concept of 'textiles' is not a static concept. It has, having regard to newly developing materials, methods techniques and processes, a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language be regarded as textiles. Applying the ratio of this decision to the facts of the case we find that the re-gasification of LNG used to take place on land earlier and even at present in many places. Now, to avoid costs of transportation of gas through pipelines o....