TaxTMI 
TaxTMI 
2021 (4) TMI 882
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....r called the Applicant) are registered under GST with GSTIN. 33AACCS8676D1Z9. The applicant Company (hereinafter referred to as SHV) is registered in India and the primary business comprises of supply of Liquified Petroleum Gas (LPG) in Bulk and in cylinders to domestic/ other Business' segments under the brand name of "SUPER GAS". SHV also supply bulk LPG for Industrial and Auto LPG. SHV is the subsidiary of SHV Energy N.V., a Dutch Multinational Company in Netherlands. They import LPG from outside India and store/ processes the same at various terminals located in India. The terminals are in Tuticorin (Tami) Nadu). Porbandar (Gujarat) and Mumbai (Maharashtra). SHV operates in 16 states in India through 3 terminals. 4 Regional offices, 24 filling plants and 6 depots in India. The applicant has sought Advance Ruling on the following questions:- 1) Whether the applicant is eligible for availment of input tax credit of GST paid on goods and services for laying of transfer pipeline for transporting Propane/Butane from Jetty to the Terminal. 2) Whether the applicant is eligible for availment of input tax credit of GST paid on goods and services for construction of ....
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.... tanks of 15.000 MT capacity each. The tank normal operation pressure shall be 700 mm WC at a temperature of approximately- (-) 450 C in case of propane and (-1) 50 C in pass of Butane these tanks are constructed for specific usage of storage of Propane and Butane. These storage tankers cannot be used for any common storage 3. Construction of water tank which is a part of firefighting system- The current expansion project is proposed to have firefighting system in compliance with Oil Industry' Safety Directorate (OISD) standards 236. Water is stored to meet the requirement of firefighting for 4 hours duration, with pumps of adequate capacity. Hence two tanks of capacity 4oooKL each is proposed. Further, water stored in the tanks will be used for direct fire extinguishing, cooling down surrounding structures & equipment as water curtain to complete cut off of fire zones. Thus, water reservoir (tank) is integral part of firefighting system which is connected with Hydrant lines sprinklers and water curtain. 4. Construction of foundation/structural support through piling- As their Project site is located close to the sea. the soil is filled up with clay with a very hi....
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.... having a total length of about 4.3 kms from Jetty to the Terminal. The above referred process of procurement of Propane and Butane from Jetty to SHV's terminal through transfer pipeline is the unique mode of transportation without which the appellant cannot manufacture LPG which is their outward supply. • The provision under Section 17 (5) restricts pipelines laid outside the factory premise which are used for making outward supply of goods or services not inward supply of goods or services. Hence, they believe that the transfer pipelines laid outside the factory premise for procurement of Propane and Butane is eligible for availing credit. B. Transfer Pipelines are used or intended to be used in the course or furtherance of business. • The Pipelines in question are used in the course or furtherance of business. The main objective and purpose of laying of pipeline is for unloading of Propane/ Butane. Propane/ Butane are the key raw material the process of manufacture of LPG. It is clear from the above that laying of pipeline constitutes an integral and inseparable part in the manufacturing process in as much as without the aforesaid activity of t....
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....tricted under Section 17 of CGST Act, 2017 and therefore, the applicant is eligible for input tax credit under Section 16 of CGST Act, 2017. 2. Eligibility of Taxes, paid on construction of refrigerated storage tank, of foundation and structural support, through piling: • The issue is whether inputs and input services used for construction of refrigerated atmospheric storage tank and foundation and structural support through piling is eligible for Input Tax Credit under CGST Act, 2017 In this regard the Applicant has stated that the main objective and purpose of construction of refrigerated storage tank is for storing, processing and maintaining of Propane/Butane which is for outward transportation of finished product i.e LPG. Storage Tank is integral pan and inseparable in the manufacturing process. Without the aforesaid activity of storing of Propane/ Butane in refrigerated atmospheric storage tank where blenders are installed to blend Propane and Butane in the desired portion to meet varied customer requirements, there cannot be manufacture of LPG. Therefore, refrigerated storage tank used for storage of Propane/ Butane are used in course of or furtherance of bus....
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....ns' clause and should not fall under any of the exclusion mentioned in the definition. • Plant and machinery means "Apparatus, equipment or machinery fixed to earth by foundational or structural support used for making outward supply". There is no specific provision in the Act which defines apparatus, equipment or machinery. Common definition of Equipment is "a set of equipment or tools or a machine that is used for a particular purpose' • Further, the meaning of the above term, 'Apparatus*, from different dictionaries as under.- • It is a collection or set of materials, instruments, appliances or machinery designed for a particular use (Mav. Web. Die). A compound instrument designed to carry out a specific function (Mc Graw Hill Die. of Sc. A- Tech. Terms). • Webster's Encyclopedic Unabridged Dictionary of the English Language which reads as under:- • a group or aggregate, of instruments, machinery, tools, materials etc., having a particular function or intended for a Specific use. • any complex instrument or machine for a particular purpose. • any system or systematic organization of activi....
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....towers'. Therefore, they have examined the clause (i) which provides for land, building or other civil structure. The exclusion is for land, building or any other civil structure. Since, foundation and structural support and storage tanks will not fall under land and building, the term 'any other civil structure' must be evaluated. In the absence of any specific definition of the term 'civil structure' the meaning of the word must be understood from the two of the previous words used in that sentence by applying the principles of Ejusdcm Generis. Hence the phrase 'any other civil structures" has to be read in conjunction with land and building and therefore any civil structure in the nature of land and building will ordinarily be a place from where the business is being carried on and not a structure used in the process of manufacture for making outward supply of goods/services. • The concept of input tax credit under GST is identical and wider than die concept of Cenvat Credit Rules, 2004 prevailing in pre-GST regime. The definition of Capital Goods in terms of Rule 2(A) of Cenvat Credit Rules, 2004 specifically included "storage tanks' and therefore was held as eligi....
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....134 CESTAT-HYD) • M/s Ultratech Cement Ltd [2017 TIOL-2442-CESTAT-BANG) • M/s The KCP Limited vs. CCE [2008-T1OL-2184-CESTAT BANG] • Commissioner of Income Tax v. Mahant Oil industries Put Ltd. 1992 193 ITR 020 Kam • Based on the above citation and submissions, they have concluded that even as per Companies Act and Income Tax Act, storage tank is construed as Plant and Machinery and therefore credit on the same is eligible 3. Eligibility of taxes paid on construction of water tank which is a part of firefighting system,- • The main objective and purpose of construction of water storage reservoir is to follow the fire protection measure at Terminal. The water is stored in tankers to meet the firefighting requirement for 4 hour duration with pumps of adequate capacity Below are the major components required for construction of Water reservoir:- • Mild steel with good quality paint • Piles, platforms and staircase • Level indicators. Transmitters • Connecting pipelines (MS) • Further, the water reservoirs are constructed as part of firefighting system. W....
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....the applicant. The authorized representative appeared for the hearing virtually on 10.12.2020. They stated that they modify the question raised in their application is as much as the eligibility on the foundation made at Q.no.4 is taken up along with Q. No. 1 to 3 and these are the questions for which ruling is sought. They undertook to furnish the shared submissions which was reiterated in hearing. Copies of Bill of entry for import of goods, literature on die process undertaken in the factory, copies of purchase order for the goods/services relating to the application. Statutory requirements for fire hydrant facility. He stated that the project of storage and processing for which the ruling is sought is yet to be setup. The storage tank is inside die premises and the pipeline is partly inside and outside the premises. 3.2 The applicant furnished the submissions shared during the hearing. The applicant apart from the submissions already made has inter-alia, stated that • They crave leave of the Hon'ble Bench to reframe their question on the issues raised in their application as follows:- 1. Whether the applicant is eligible for availment of input tax credi....
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....lins English Dictionary "the surrounding region or an area" Merriam Webster "the region immediately surrounding a place" • On perusal of aforesaid meanings, precinct would mean an area around building or a place, factory means any premise including the precints. A conjoint reading of die term 'factory' and "Precincts" makes it abundantly clear that the factory includes the surrounding areas which is pipeline laid from jetty to Terminal. Therefore, pipeline shall be regarded as available within the premise of the factory and hence eligible for credit. • The expression used in the explanation to Section 17 of GST Act refers "plant and machinery' to mean which are used for making outward supply of goods or services or both and hence if the pipelines are to be excluded from the meaning of "Plant and machinery' only such pipelines used for outward supply should be denied credit • The pipeline cannot be regarded as laid outside the factory and on the contrary, they are very much part of factory premises and do not fall under the exclusion given in the explanation of "Plant and machinery" • The main objective and purpose of sett....
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....47) E.LT.996 (Tri. - Del) • M/s Birla Corporation Ltd Vs Commissioner of Central Excise 2005-TIOL-99-SC-CX • Commissioner of C.Ex., Belgaum Vs. M/s Hindalco Industries Ltd (C.E.A. No 209/2008 in High Court of Karnataka) • Commissioner of Central Excise, Salem Vs M/s. Chemplast Sanmar Ltd (T.C. No. 1380 of 2006 of High Court of Madras) • Jayaswal Neco Ltd Vs Commissioner of Central Excise. Raipur [2015 (319} E.L.T. 247 (S.C.)] • Commissioner of Central Excise, Coimbatore A Ors. Vs Jawahar Mills Ltd & Ors (C.A. 619-626 of 2000] • Process Description of LPG processing and supply after unloading the propane and Butane with Process Flow Diagram • Bills of Entry for Propane and Butane at Porbandar Port • Purchase Order issued by them for,- 1.2 nos of Refrigerated Storage Tanks(EPC) with PO No. 4500405026 dated 11.03.2020 on Sharp Tanks and Structurals Pvt Ltd, Mumbai 2. Mech. Elec A Instrumentation work for Bullets; Civil & Structural work for Mounded Bullet with PO Number 4500405045 dated 11.03.2020 on Sharp Tanks and Structurals Pvt Ltd. Mumbai 3. Agreement....
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.... or both received for construction of an immovable property (other than plant and machinery) on his own account, ITC is not eligible even if used in the course of furtherance of business. Further, item No (i) of Explanation to section 17 of the TNGST Act, 2017 rules out 'other civil structures' from the ambit of plant ft. machinery. Hence, it is opined humbly that, ITC shall not be eligible on construction of foundation/structural support through piling in their premises. 5. The Centre jurisdictional authority informed that there is no pending proceedings under Section 98(1) of GST Act against the applicant. 6. We have carefully examined the Statement of facts; supporting documents filed by the Applicant, submissions made after hearing and the comments of the Jurisdictional Officers. The applicant has stated that they are contemplating expansion to increase the LPG capacity from 3,50,000 Metric Tons Per Annum (MTPA) to 12,00.000 MTPA at their Tuticorin Terminal. As part of proposed expansion, new Propane and Butane unloading arms(one each) are to be installed at jetty and new transfer pipelines laid; refrigerated storage tank for storing, processing and maintaining of propane....
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....is also mixed in static blender to produce LPG LPG is dosed with mercapton before loading into road tankers with mercaptan dosing unit. The blended LPG is sent to Tanker gantry consists of new 8 no. loading bays & existing 3 no loading bays via Tanker loading arms filled into road tankers. 7.2 The applicant was asked to furnish Bill of Entry in respect of import of Propane and Butane by them. It is seen that the applicant has furnished the 'Bill of Entry' in respect of SHV Energy Pvt Ltd, Porbandar Gujarat and not pertaining to them. 7.3 The applicant has furnished the Purchase Orders issued by them for the various supply of Goods and Services for which their eligibility to avail the GST element on such Pos as Input Tax Credit is sought before this authority The details of the said POs are discussed as under.- 1. PO No. 4500405026 dated 11.03.2020 on Sharp Tanks and Structurals Pvt Ltd. Mumbai - for 2 nos of Refrigerated Storage Tanks (EPC) with SAC 995442 The service details under this P.O. are Completion of Engineering, Supply of Major raw materials. Supply of Bottom Insulation. Installation of Bottom Insulation, Supply of Outer Insulation, Installation of outer In....
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....ion works and Civil & Structural works for Bullets and is also a composite supply of various goods and services and GST is calculated (a 18%on the entire value of the works. 3. PO No. 4500401679 dated 10.02.2020 on Geo Foundations A Structures Private Ltd - for Piling works for Tutieonn Terminal Expansion Project with SAC 995413. The service details under this PO includes Mobilisation & Demobilisation, Vertical Piles by boring, Empty boring for vertical pile, Supply, transport &fixing steel in RCC. Extending piles abv cutoff level. Excavation upto 2m depths, carting away, stacking & spreading bore. Cyclic vertical toad tests, Pull out load tests, Routine cyclic vertical load tests. Pile' Integrity test. Routine lateral vertical load test, Routine pull out load test This PO is issued for piling works and is a composite supply of goods and services and GST is calculated @ 18% on the entire value of the works. 4. PO Number 4500407286 dated 22.04.2020 on S.R. Selvaraj & Sons. Thoothukudi - for Civil & Structural works for CCPL with SAC 995413. The service details under this PO are Excavation in ordinary soil, boulders/rock, supply of black fill earth. Laying of thick ....
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....hase Orders are to undertake the construction as an EPC and is to handover after successful demonstration of Performance Guarantee (PG) parameter. In respect of 'Pile foundation works' for the project site, it is seen that the entire work is undertaken by the vendor as Works Contract' as the scope of work includes the entire spectra of activity from Mobilisation to loadtest. The civil & structural works for CCPL is again executed as Works Contract. The applicant seeks the tax paid for the services executed as Works Contract' in respect of Refrigerated Storage Tanks; Fire Water Tanks and the Pile foundation works as Input Tax Credit. Further, they also claim that they are eligible to credit of tax paid on the supply of Pipes (goods) sourced by them on own account and to be used for Cross Country Pipe Linc(CCPL) proposed to be laid from the jetty to the terminal. 7.4 The contention of the applicant in general is that the above are used in the course or furtherance of business and are 'Plant and Machinery' excluded by the restrictive Section 17(5) and in particular.- • In respect of the pipelines,- • They are unique mode of transportation used to bring the....
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....ble 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 art input service for further supply of works contract service; (d) Goods or services or both received by a taxable person far 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. 8.2 From the above provisions, it is evident that,- • Inputs are those which are not capitalized in the books of accounts and which are used or intended to be used in the cours....
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....undation. Section 17(5) restricts the credit on such goods received for construction & Works Contract service received except when such 'goods/Works Contract' services are availed in respect of 'Plant and Machinery' and Explanation, which defines 'Plant and Machinery' restricts credit on the 'Pipelines laid outside the factory'. 9.2 We find the applicant has contended that the exclusion is applicable only to those pipelines laid outside the factory premises which are used to make outward supply, whereas in the case at hand the pipelines are laid for inward transmission; and that definition of 'factory' as per factories act, slates that 'factory' means any premises including the precincts thereof, hence the factory includes the surrounding areas, which is pipeline laid from jetty to Terminal and therefore the pipeline shall be regarded as available within the premise of the factory' and eligible for credit. 9.3 We find the Explanation specifies that apparatus, equipment, and machinery fixed to earth by foundation, used for making outward supply of goods is 'Plant and Machinery' and there are specific exclusions, which include 'Pipelines laid outside the factory premises' The ....
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....planation to Section 16(4) was carried out to give effect to this decision. Shri Rajan Khobragade CCT Kerala stated that even after deleting the word 'pipelines' und telecom towers' in section 16, there could be an interpretation that input tax credit on these two items could be taken. CCT, Gujarat explained that the presently drafted definition of capital goods in the model GST law needed re-examination as the present explanation below section 16(4) of the model GST Law made any apparatus, equipment or machinery fixed to earth and used for making outward supply of goods or services eligible for input tax credit and this could potentially cover pipelines and telecom towers. Shri P. K. Mohanty, Consultant (GST), CBEC stated that the concern of the states was that the definition of the term 'plant & Machinery' was very wide and observed that one way to address this concern was to restrict the meaning of 'plant & Machinery' to certain specified chapters of the Harmonised System of Nomenclature (HSN), namely chapters 84 (mechanical Machinery), 85 (electrical machinery) and 90 (apparatus and equipments) on which the benefit of input tax credit could be given and by this method, input ta....
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.... as to specifically exclude pipelines laid outside the factory premises and telecommunication towers (Section 17). On a cogent reading of the above, it is evident that the intention of the GST Law is to exclude 'Pipelines laid outside the factory premises' from the definition of 'Plant and Machinery'. In Ute ease at hand, the applicant has slated that the pipelines approximate length of around 4.1 Km are to be laid from jelly to the Terminal and accordingly, we hold without any hesitation that the credit of Pipes and Pipelines laid outside the factory' is not available for the applicant. The decisions relied upon by the applicant is based on the earlier laws and do not have any application while considering the GST Provisions, in as much as the GST law has clearly defined what is to be considered as 'capital goods'. 'Plant and Machinery' and the specific exclusions. 9.5 With respect to the claim of the applicant that as per the definition of 'factory' under factories act. the precincts are pan of the factory and therefore the pipelines are part of the factory, we find that adoption of the definition under another Act (proposed for a different purpose) is not tenable as held b....
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....ludes land building and civil structure. So we find that the moot point to be decided is whether the 'refrigerated storage tank' falls under the class of apparatus, equipment, machinery and the proposed foundation or structural support claimed falls under the 'foundation' or 'civil structure' 10.2 From the submissions it is seen that, the Propane/Butane is stored, processed and maintained in refrigerated storage tanks before being dispatched to the end customers as per their requirements. Refrigerated storage tanks are constructed in a manner which can facilitate storage of Propane/ Butane and maintain its characteristics. It is built with certain equipment along with the concrete inputs to enable it to perform the said functions. Therefore, it is clear that these tanks are used for making outward supply'. 10.3 The GST Act does not define apparatus, equipment, machinery, foundation, civil structure Therefore, the general parlance understanding of the above terms is to be considered. Apparatus is the technical equipment or machinery needed for a particular activity or purpose; Equipment most commonly refers to a set of tools or other objects commonly used to ....
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....r an equipment/apparatus. From the Purchase Orders furnished, we observe that the 'Pile Foundation' for the Project site is vested with 'Geo Foundations & Structures Private Ltd' as a separate work. This by itself shows that the 'Pile foundation' is not a structural support or foundation for the storage tanks under consideration. The 'Pile foundation' as slated by the applicant is made considering the geophysical nature of the area to strengthen the load bearing capacity and is not a structural support for the Tanks under consideration. These 'Pile foundations' clearly fall under the class of 'Other Civil Structures' excluded from the ambit of 'Plant and Machinery''. While the provision is by itself explicitly clear, even by applying the principle of Ejusdem Generis, we find, the Pile foundation' are more aligned with the 'Land', which stands excluded, than the 'structural support for an equipment' which is stated as 'Plant and Machinery' in the 'Explanation' to Section 17 of the GST Act. Therefore, credit on such 'Pile foundation' are not available, they being 'other civil structures' and excluded in the explanation to 'Plant and Machinery'. 10.6 The case laws referred are in t....
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....water Storage system we are inclined to hold the Water Storage Tanks' in the case of applicant, as 'Plant and Machinery' provided, the said tanks are accounted as 'Plant and Machinery and not as 'Immovable Property-Land and Building' in their books of accounts. 11.3 Having found as above, we again see that the applicant in this instance also, claims the credit of 'Pile Foundation' made upon which the Waler storage tanks are constructed with necessary' foundation /structural support. We find that the applicant vide the PO No. 4500405071 dated 11.03.2020 has entrusted the entire work of construction/fabrication of the water storage tanks along with the required structural support or foundation required for such water tank, while the Tile foundation' of the site is entrusted as separate work, which by itself goes to prove that the 'Pile foundation' are not the foundation required for the Waler Storage Tanks and are not part of 'Plant and Machinery', the fact of which has already discussed in detail in Para 10.5 above. 11.4 In view of the above, we hold that the applicant is eligible for availment of input tax credit of GST paid on goods and services for setting up of Fire Water ....