TaxTMI 
TaxTMI 
2021 (1) TMI 496
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....cation services to prospective customers. 2. The applicant has submitted that as per the Concession Agreement, the applicant is required to develop the LNG infrastructure for the purpose of regasification of LNG, and FSRU, which would be installed in Harbor Area of the Port facility; that presently, as on the date of filing of this Application, the Port infrastructure and the FSRU is under development stage and has not yet been commissioned/operationalized and is expected that this facility would be commissioned/operationalized by mid 2020; that the proposed LNG Port Infrastructure consists of building two Jetties (referred to as 'Jetty 1' & 'Jetty 2'), as per the development plan and these LNG Jetties which are proposed to be developed are completely unique in terms of their purpose and use as compared to the purpose and use of 'Jetty' as understood in a commercial parlance and shipping industry parlance; that these Jetties are essentially and primarily proposed to be used as foundation for the plant and machinery, that is, loading and unloading equipment and other related equipment which will be used for the purpose of loading, unloading, and transporting LNG; that the LNG Jet....
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....ay be prescribed and in the manner as prescribed in Rule 49, every registered person shall be entitled to take input tax credit on any supply of goods or services or both which are intended to be used in the course or furtherance of his business; that as far as conditions and restriction in availing input tax credit is concerned, the Applicant would like to draw reference to the 'Explanation' to Section 17 of the CGST Act to examine whether the LNG Jetties proposed to be built by the applicant can be said to be a foundation to 'Plant and machinery'. The relevant extract of the provisions is as below: "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) telecommunications towers; and (iii) pipelines laid outside the factory premises." 4.1 The applicant has further submitted that as per the said explanation, any foundat....
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....mperatures to reduce vaporization of LNG. Cold drain tanks are used to store LNG gas. The tanks are provided with protection against high pressure to avoid any damage and with robust controls to keep the pressure within limits. Generally, LNG cryogenic pumps are also installed inside the tanks, which pump out LNG from the tanks at intermediate pressure. IV. Jetty Substation/IRR: Substation-20: This substation feeds all the LV electrical equipment/loads located in the Jetty Topside facility. Based on the hazardous area classification, this substation is pressurised to avoid any ingress. Blast walls are provided wherever required as per codes and standards. This substation shall receive 415V power from Substation No.10.(located onshore). Major loads fed from this Substation are the Loading arms, UPS loads, Lighting. Substation-20 comprises of the following key equipments: 1. UPS and Batteries. 2. Switch gears. 3. Transformers. 4. Instrument Rack Room(IRR)-consist of Distribution Control System(DCS). Emergency Shutdown Systems (ESD), Fire Spill Gas Direction System (FSGDS) cabinets. V. Nitrogen Buffer Vessel; Two Nitrogen buffer ve....
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....the CGST Act, 2017 or GGST Act, 2017 and therefore, as per the settled judicial principles of interpretation, reference is drawn to the dictionaries for the meaning of the term 'foundation'. Relevant extract from dictionaries is as below: https://www.collinsdictionary.com/dictionary/english/foundation 'The foundations of a building or other structure are the layer of bricks or concrete below the ground that it is built on.' https://en.oxforddictionaries.com/definition/foundation 'The lowest load-bearing part of a building, typically below ground level.' https://www.businessdictionary.com/definition/foundation.html 'Part of a building or structure that transmits structural loads to the earth and supports the superstructure.' 5.1 The applicant has submitted that in technical and commercial parlance, typically 'foundation can be categorised as: (a) shallow foundations and; (b) deep foundations; that the term 'shallow' and 'deep' refer to the depth of soil in which the foundation has been made. Generally, shallow foundations can be made in depths of as little as 3ft (1 metre), while deep foundations can be made at depths of 60-20....
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....structure is situated on or near sea-shore or river bed and foundations are liable to be scoured due to the action of water. 5.4. The applicant has further stated that in the present case, given the nature, characteristics as well as meanings of 'foundation' and 'pile foundation', the characteristics, feature, layout and purpose of the LNG jetties to be built for it to qualify as foundation/pile foundation and also rationale as to why this Jetties are different from normal jetty. • LNG jetties are being built in the harbour area are in the nature /akin to pile foundation. • These jetties are custom designed for the purpose of installation of plant and machinery and are built considering the load of the plant and machineries to be installed on it and to minimize the effect of shocks and vibrations (dynamic forces) resulting from operation of these equipment. • Further, these jetties are meant to give stability to the plant and machinery installed on it and keep its operation vibration free. • In normal terms, jetty is generally being built considering the same to be used as landing stage or a small pier where the vessels/boats a....
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....ant can accordingly avail 'input tax credit' of GST paid in inputs, input services as well as capital goods procured for the purpose of building the LNG jetties? DISCUSSION & FINDINGS: 6. We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments/discussions made by their representative Ms.Nirali Gada at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 7. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 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 similar provisions of the GGST Act. 8. As per the submission of the applicant, they have entered into a Concession Agreement with the Gujarat Maritime Board ('GMB') to, inter-alia, implement the development, construction, operation and maintenance of Liquified Natural Gas ('LNG') Port with a Floating Storage and Regasification Unit ('FSRU') faci....
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....t made with Gujarat Maritime Board as well as photos of the jetties they proposed to build. Since it was not clear from the submission as to whether the applicant was involved in the supply of goods or services or both in the instant case, the representative was directed to make an additional submission clarifying the above facts along with the aforementioned documents. However, neither any additional submission nor any documents as called for during personal hearing have been received so far. In view of the above, we are left with no option but to decide the case on the basis of the records available as well as on the merits of the case. 10. From the submission of the applicant, we find that they have entered into a Concession Agreement with the Gujarat Maritime Board ('GMB') to, inter-alia, implement the development, construction, operation and maintenance of Liquified Natural Gas ('LNG') Port with a Floating Storage and Regasification Unit ('FSRU') facility in Jafrabad, Gujarat under the Build, own, Operate and transfer ('BOOT') basis and the purpose of the construction of the 2 jetties is for the installation of plant and machinery on it. It, therefore, appears that it is a ....
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....tion of a building or other structures are the layers of bricks or concrete below the ground that it is built on. (c) As per Macmillan dictionary: the parts of a structure that is below the ground and supports the rest of it. (d) As per Cambridge dictionary: the structures below the surface of the ground that support a building. 10.3 On going through the aforementioned definitions of 'foundation', the one thing that we find strikingly common in all of them is that foundations are structures which are located below the ground and support the structures/buildings built above it. Thus, the primary condition for a structure to be a 'foundation' is that it is required to be a concrete structure made of stones, bricks, cements etc., which should be located below the ground and give support to the structure/building constructed above it. However, on going through the definitions as well as the details of jetties proposed to be built by the applicant as per their agreement with GMB and comparing the same, we find that the jetties are just civil structures or immoveable property, which are akin to a building wherein the only difference being that buildings are located o....
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.... (i) They have to be apparatus, equipment and machinery. (ii) They have to be fixed to earth by foundation or structural support. (iii) They should be used for making outward supply of goods or services or both. (iv) They should be located in a factory premises. 11.2 Therefore, we need to find out whether the applicant fulfils all the aforementioned conditions or otherwise, which shall be discussed one by one as under: (i) We find that the applicant in his submission has defined the terms apparatus, equipment and machinery as per Mac-millan dictionary and Mc-Graw dictionary as under: (a) Mac-Millan dictionary: 'Apparatus: the machines, tools, and equipment needed for doing something, especially something technical or scientific. Equipment: the tools, machines, or other things that you need for a particular job or activity. Machinery: a piece of equipment that does a particular job by using electricity, steam, gas etc. (b) Mc-Graw dictionary: 'Apparatus: It is a collection or set of materials, instruments, appliances or machinery designed for a particular use. Equipment: One or ....
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....tory premises'. 11.7 In view of the above, since the apparatus, equipment and machinery proposed to be installed by the applicant do not satisfy the conditions required to be defined as 'plant and machinery', we conclude that the same are not covered under the definition of 'plant and machinery' in terms of the Explanation to Section 17 of the CGST Act, 2017. 12. The next issue to be discussed is whether as per Section 16 read with Section 17 of the said Acts, the applicant can avail 'input tax credit' of GST paid in inputs, input services as well as capital goods procured for the purpose of building the LNG jetties. In this regard, we would like to draw attention to the earlier paras, wherein it has been discussed and proved that the apparatus, equipment and machinery (as referred to by the applicant)proposed to be installed by the applicant on the jetties are not covered under the definition of 'plant and machinery' as defined in the Explanation to Section 17 of the CGST Act, 2017 and that the jetties are not covered under the definition of 'foundation' as defined in the said explanation. Also as discussed earlier, jetties proposed to be constructed by the applicant are civ....