TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1452
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.... 617 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA. BRIEF FACTS OF THE CASE 1. That the appellant is the company having its LNG regasification plant at Dabhol, Maharashtra and hereby engaged in the regasification of the LNG. Its GSTIN in the state of Maharashtra is 27AAGCK0390Q1ZO. 2. That, the LNG reaches to plant through jetty where it is unloaded from various ship/cargos. The captive jetty is situated in sea and it is about 1.8 km from the tanks farm area and is well within the plant area. The length of the jetty is around 300 meters and handles presently around 20 LNG Cargo in a year without the breakwater. 3. That, in order to protect the jetty from the high tide and forceful sea waves, there is existing partly constructed break water which was constructed by Dabhol Power Company (DPC). This break water was the part of the original of the approved design itself, meaning thereby, the jetty was not workable at its potential without the existence of break water. 4. That, the Break water was designed to prevent the high waves and tide to touch the jetty and cargo/ ships of LNG and thereby important for the safety for the jetty as well as the ship from the risk of damage. 5. Th....
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....hat the learned ARA, through its order has held that the KLPL is not eligible to claim ITC mainly on the below mentioned three grounds: - a. Construction of Breakwater is only facilitating receipt of raw material i.e. LNG and is not going to be used for rendering outward supply. b. The Breakwater, being an immovable structure, cannot be considered as Plant & Machinery. c. KLPL is already functioning without the complete break water and hence could not able to establish that it is impossible for them to function without Break water. 11. That the appellant being aggrieved by the impugned order has preferred an appeal before the appellate authority for advance ruling under section 100 of the CGST/MGST Act on the following grounds:- GROUNDS OF APPEAL 12. Because on the facts and circumstances of the case, the learned ARA has failed to appreciate the definition of the term "Plant and Machinery" as defined in the explanation to section 17. Although the learned authority has rightly appreciated the function of the breakwater when it has stated that "in the subject case the breakwater will, if any, be facilitating the receipt of raw material i.e. LNG by the applicant". However it ....
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.... Additional Place Of Business:- No Additional Place of Business registered. Authorised Signatory: - Alok Kumar Jain, Gen. Manager. 18. Written contention given before the Advance Ruling- 18.1 The applicant itself is a service provider, who provides 'service' of regasification of Liquefied Natural Gas (LNG) to the Ratnagiri Gas and Power Private Limited (RGPPL). The Service, mentioned as "Regasification of LNG" in the supply invoice to RGPPL, is covered under HSN Code - 9997 and having GST Tax rate of 18% (CGST 9% and SGST 9%). The Applicant neither makes purchases of LNG nor make sales of it in the original or any other form directly. The dealer is planning to build a 'breakwater wall' beyond the existing operational "Captive etty", which (wall) the applicant says is a part of the existing plant, and wants to take input tax credit f it. In order to clear the doubts, whether the 'breakwater wall' will be treated as immovable property or a plant, an advance ruling has been sought. 18.2 In the Grounds of law, submitted along with the application, at point no. 3 the applicant has quoted that "the applicant is not covered under the exclusion clause of section 17(5)(d) of the Goods....
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....hat the assessee's generating station building is so constructed as to be an integral part of its generating system. It must, therefore, be held that it is a "plant" and entitled to investment allowance accordingly." If we look at the dictionary meaning of "integral Part", as mentioned in the above ruling, it means necessary to make a whole complete or fundamental or without something functioning is impossible. And from rest of the rulings it is crystal clear that any civil construction or building or both in order to treat as a 'plant' has to be an indispensable part of the concerned working unit, and without them basic functioning of that unit is not possible. In view of the above facts and the reasoning given by the applicant in his application, applicant could not establish that it is impossible for him to function without breakwater wall. Also the applicant has shown total outward supply of Rs. 335,82,08,218/- in the GST return form GSTR 3B, filed for the period From April 2018 to January 2019, which reveals that his activities are efficiently carrying on. Hence the activity of construction of 'breakwater wall' falls under the section 17 (5) (d) of the GST ACT, on account of....
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....s otherwise. The foundation or structural support of the plant & machinery, even though it is an immovable property, will be considered as an integral part of plant & machinery. Therefore all immovable structures are not disqualified from being covered in the term plant & machinery." Here if we read section 17 (5) (d) with the explanation in section 17 (6) it makes clear that any immovable civil structure attached to the apparatus, equipments and machinery can be treated as plant and machinery whereas the breakwater wall is an independent civil structure. 19.5 In a high court ruling in the case of Mazgaon Dock Limited - reported in 191 ITR 460 = 1991 (3) TMI 114 - BOMBAY HIGH COURT, the same had been quoted by the applicant in his Advance ruling application in support of his ITC claim on breakwater wall, wherein the Hon. Court has stated that, "In order for a building or concrete structure to qualify for inclusion in the term plant, it must be established that it is impossible for the equipment to function without the particular type of structure". 19.6 In the grounds of law of appeal at the point no.3 the applicant has questioned the essentiality test and quoted that no such e....
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....hey transfer LNG through a Pipeline from a cargo ship to the processing unit and further after regasification to the RGPPL. The visit concluded around 12.15 pm. 20. 3B RETURN CONSOLIDATION OF M/S KONKAN LNG PRIVATE LIMITED, GSTIN 27AAGCK0390Q ZO, PERIOD FROM APRIL 2018 TO AUGUST 2019:- INWARD OUTWARD SUPPLY IGST CGST SGST INWARD SUPPLY LIABLE TO REVERSE CHARGE IGST CGST SGST Apr-18 408969219 135 36806993 36806993 0 0 0 May-18 109993273 9899394 9899394 25000 0 2250 2250 Jun-18 20637375 1857364 1857364 48610 8749 0 0 Jul-18 21875653 1968809 1968809 0 0 0 0 Aug-18 20920120 1882812 1882812 1347527 206555 18000 18000 Sep-18 82748704 7447384 7447384 0 0 0 0 Oct.18 673061220 2331 60574344 60574344 3690042 651608 6300 6300 Nov-18 494509180 1068 44505293 44505293 7769605 1387458 5535 5535 Dec-18 542923070 1800 48862175 48862175 0 0 0 0 Jan-19 465725368 1392 44614587 44614587 5000 4500 4500 Feb-19 440857349 39677161 39677161 75000 6750 6750 Mar-19 11932 2148 1880977 321152 8712 ....
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....ppellant is whether he will be able to claim the ITC on such construction/reconstruction of the break water. The AAR held that as per section 17(5)(d) of the CGST Act, the appellant is not allowed to take the credit of ITC of the amount paid to the contractors on the basis of the following reasons:- a) Construction of Breakwater is only facilitating receipt of raw material i.e. LNG and is not going to be used for rendering outward supply. b) The Breakwater, being an immovable structure, cannot be considered as plant and machinery. c) KLPL is already functioning without the complete break water and hence could not able to establish that it is impossible for them to function without Break water. The appellant has raised the following grounds to support their contention that they are eligible for ITC on the said transaction. i) ITC will be eligible because it is going to be used for rendering outward supply of goods or services or both. ii) The AAR failed to consider that though break water is an immovable property it can be considered as plant and machinery as all immovable structure are not disqualified from being covered in term 'plant and machinery'. iii) The AAR has ....
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....he severity of the waves and tides. At present ships are allowed only at certain time when the intensity of waves is less than certain limit. After the construction of the break water there will be no time restriction on ships entered the jetty. 25. Looking to the above issue, it is a basic question is as whether the break water constructed for the appellant can be considered to be 'plant and machinery'. The appellant has contended that though break water is an immovable property it is covered under the term 'plant and machinery' since Accropods which are used to construct the break water are interlocking device fixed to the earth by foundation are nothing but apparatus. In order to appreciate the contention let us have a look at the various meanings of the term 'Plant'. Cambridge Dictionary * the land, buildings, machinery, apparatus, and fixtures employed in carrying on a trade or an industrial business * b: a factory or workshop for the manufacture of a particular prod uctalso : POWER PLANT * e: the total facilities available for production or service * d: the buildings and other physical equipment of an institution * place where an industrial or manufacturing proce....
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....s not come under the definition of plant and machinery, there seems no purpose in examining whether it is used for making outward supplies. 27. It is seen from the scope of work documents i.e. scope of work given in Clause (6) covers a type of work which is civil in nature. We will see the clauses in brief as under:- 6.1. Basic design, physical model tests, detailed and construction engineering with calculations and drawings, as required in documents "Design Criteria for Completion of Breakwater (6724-000-83-41-8D-4005)" 6.3 Pre-engineering, Pre-construction/regular surveys during construction and post-construction surveys of bathymetry, meteorological parameters and partially constructed sections, as indicated in "Construction Specifications for completion Breakwater (6724-000-83-41-BD-4005)". Contractor shall also carry out bathymetry survey of existing navigation channel before and just after monsoons (2016 monsoon and 2017 monsoon) and report shall be submitted to the owner. All surveys including pre-engineering surveys, pre-constructian/regular surveys during construction and post construction surveys shall be carried out by a qualified third party survey agency appointed....