TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 611
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 560070 (herein after referred to as Appellant) against the Advance Ruling order No. KAR ADRG 46/2020 dated 30th July 2021. Brief Facts of the case: 3. The Appellant is engaged in the business of solid waste management. They provide services for treatment, storage and disposal of hazardous waste. They collect hazardous waste from various industries across Karnataka and dispose the same as per the guidelines of Central Pollution Control Board (CPCB) and Karnataka State Pollution Control Board (KSPCB). For processing and disposal of the solid waste, they have taken land on lease from the Government and constructed a land filling pit into which the solid waste is filled and closed and sealed for 30 years. The land fill pit has been capitalised in their books of accounts as an asset and they have claimed depreciation under Income Tax. 4. In order to obtain a ruling on the classification of the service provided by them, the Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on the following question: "Whether the land filling pit can be considered as 'Plant and machinery' and therefore eligible for input tax credit or; whether the landfilling pit is to be....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... but this was not done which amounts to violation of principles of natural justice and hence is liable to be set aside. 8.2. The Appellant submitted that they had given case laws which lay down the principle that if a building or structure constitutes an apparatus or a tool of the taxpayer by means of which business activities were carried on, it amounts to a 'plant'; that the case laws given by then also lay down the principle that the word plant should be given a wide meaning and not a restrictive meaning; that they had relied on a Supreme Court decision to support the contention that plant need not be used for mechanical operations; that the land filling pit satisfies the 'functionality test' and can be considered as a plant even though it was embedded in the earth. They submitted that the lower authority has not made any reference or discussion to any of the judicial precedents relied upon by them; that the AAR has only made a plain observation that these cases are not applicable for the specific purpose of Chapter V and VI but made no attempt to discuss or distinguish the cases submitted by the Appellants. 8.3. The Appellant submitted that on the land leased from the Governm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....House (P) Ltd vs Commissioner of Income Tax, Andhra Pradesh - AIR 1986 SC 338 b) J.K. Cement Works vs The State of Karnataka 2017 (7) G.S.T.L 408 In view of the above decisions, they submitted that in their case, the land filling pit is a plant; that the entire process of disposal takes place in the land filling pit and it is not a mere storage mechanism; that the processing of content in the land filling pit and its monitoring is continuous as per the standards prescribed by the concerned statutory authorities to ensure that land and water are not contaminated. 8.5. They also submitted that the observation that the process carried out in a plant must be a controlled/mechanised process/activity is contrary to the position laid down by the Supreme Court in Scientific Engineering House (P) Ltd vs Commissioner of Income Tax, Andhra Pradesh cited supra; that the Hon'ble Supreme Court made it clear that the term plant need not be used for mechanical operations. They also submitted that the land filling pit satisfies the 'functionality test' which was explained by Lord Guest in IRC vs Barclay Curie and Co and referred to by the Karnataka High Court in the case of Santosh Enterprises ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so submitted that the fact that the land filling pit is embedded in the earth does not preclude it from being a plant; that the Supreme Court in the case of Scientific Engineering House (P) Ltd vs Commissioner of Income Tax, Andhra Pradesh has held that plant would include any article or object, fixed or movable, used by businessman for carrying on his business. Therefore, the fact that the land filling pit is embedded in the earth is not relevant to understand if it falls within the ambit of plant or machinery; that in several instances the Courts have held that a structure is a 'plant' even though it was embedded in the earth. Some of the decisions relied upon by them in this regard is as follows: a) Commissioner of Income Tax vs Oil India Ltd - (1992) 105 CTR (Cal) 356 b) Tribeni Tissues Ltd vs Commissioner of Income Tax - (1991) 190 ITR 487 (Cal) Therefore, in their case, the land filling pit qualifies to be a plant or machinery as provided under Section 17(5)(d) of the CGST Act. 8.8. The Appellant submitted that the term used in the Second Explanation to Section 17 and the term used in Section 17(5)(d) is not the same; that the Second Explanation to Section 17 explains t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... October 2021. The hearing was conducted on the Webex platform following the guidelines issued by the CBIC vide Instruction F.No 390/Misc/3/2019-JC dated 21st August 2020. The Appellant was represented by Shri. K.J Kamath and Ms Veena J Kamath, Advocates and authorised representatives. 9.1. The Advocate explained the facts of the case and the circumstances leading to the present appeal. He submitted that the Appellant is engaged in the business of solid waste management which involves not only collection of the waste but also effective disposal of the waste; that for this purpose, the Appellant has constructed a land filling pit. A query was posed before the lower Authority whether the land filling pit is restricted for input tax credit by virtue of the 2" explanation to Section 17(5) of the CGST Act which excludes 'civil structures' from the definition of 'plant and machinery'. The lower Authority had given a ruling that the land filling pit is a civil structure by considering the opinion received from the jurisdictional officer which was not shared with the Appellant and hence amounted to violation of the principals of natural justice; that the Appellant approached the Hon'ble H....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red under the exception given in clause (d) of Section 17(5) and therefore not hit by the restriction to avail input tax credit. The Advocate undertook to furnish additional written submissions for consideration as well as a written summary of the submissions made today. 9.4. A written summary of their oral submissions was submitted by the Appellant on 1061 November 2021 and the same is taken on record. DISCUSSIONS AND FINDINGS 10. We have gone through the entire case records and considered the submissions made by the Appellant in their grounds of appeal, as well as the submissions made at the time of personal hearing and in the additional submissions. 11. Briefly stated the facts are, the Appellant is engaged in providing service of treatment, storage and disposal of hazardous waste which is done as per the guidelines of the Central Pollution Control Board and Karnataka State Pollution Control Board. For the purpose of carrying out this activity, they have obtained land on lease from the Government on which they have constructed facilities such as : a) Land filling pit, b) Temporary waste storage area, c) Utility/Parking, d) Green Belt Area, e) Office & Laborator....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eral paras of the impugned order are identical to the earlier order. The Appellant is also aggrieved by the fact that the submissions made by them before the lower Authority during the denovo proceedings along with the 8 case laws relied upon, were not considered by the lower Authority in the impugned order. We propose to address these concerns in our findings here below. 14. The issue for determination by us is whether the Appellant is entitled to avail input tax credit on the construction of land filling pit or is it hit by the restriction laid down in clause (d) of Section 17(5) of the CGST Act. Before we analyze the provisions of law, let us understand what a land filling pit is and how it is constructed. Contrary to common understanding, a land fill for disposal of hazardous waste is not an open dump. It is an engineered pit in which layers of solid waste are filled, compacted and covered for final disposal. Land filling is the term used to describe the process by which solid waste is placed in the landfill. The purpose of land filling is to bury/alter the chemical composition of the waste so that they do not pose any threat to environment / public health. Landfills are built....
X X X X Extracts X X X X
X X X X Extracts X X X X
....specified in Section 16(2) and Section 17 (5) of the said Act. Section 17(5) of the CGST Act stipulates the situations wherein input tax credit shall not be available notwithstanding anything contained in Section 16(1) of the said Act. We are concerned with the provisions of clause (d) of Section 17(5) of the said Act which reads as follows: (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: - ........ ....... ....... (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. 17. From a reading of the above clause (d) of Section 17(5), it emerges that goods and services received by a taxpayer for construction of immovable property on his own account are not eligible for input tax credit. The exception however, is when the immovable property is in the nature of plant or machinery, then the goods and services received for construction of plant or machinery wil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 17(5), which clause they are not covered under. We find this argument to be unacceptable and devoid of merit. No doubt the words 'plant' and 'machinery' have not been individually defined in GST law. However, by defining the expression 'plant and machinery', the legislature has intended to define a particular genus or class or category. Defining the expression by the usage of the words plant and machinery in conjunction with each other implies that the meaning of one word takes its colour from the whole. In other words, the meaning of the individual words 'plant' and 'machinery' will have to be derived from the definition of the expression "plant and machinery". Therefore, the terms 'plant' or 'machinery' will have to be understood as "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 would include foundation and structural supports but would exclude (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii)pipelines laid outside the factory premises. We, therefore, dismiss this argument of the Appellant. 19. Having said this, we observe ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this context that the Hon'ble Supreme Court, after having taken into consideration the definition of 'plant' as given in the Income Tax Act, held that the capital asset acquired by the assessee, namely, the technical know-how in the shape of drawings, designs charts, plans, processing data and other literature falls within the definition of 'plant' and therefore a depreciable asset. 20. We are unable to appreciate the precedential value of this case to the facts of the case before us. The context in which the term 'plant' has been defined in the Income Tax Act is not relevant for interpreting the said term under the CGST Act. The Supreme Court in the case of Kohinoor Elastics Pvt Ltd vs Commissioner of Central Excise [2005 (188) ELT 3 (SC) has settled the principle that a statute has to be interpreted in the context in which the words are used in that particular context. The Hon'ble Supreme Court has pointed out that it is not permissible to bring in the meaning in another Act for interpretation of certain terms in the Central Excise Act. Applying the ratio of this decision, we hold that when the CGST Act has a clear definition of 'plant and machinery', there is no necessity of r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... civil structure in as much as they have not used any cement or steel in the construction of the land filling pit. The term 'civil structure' has also not been defined in the GST law. A general understanding of the term can be derived from the definition of 'civil engineering' given in Britannica.com as: "The profession of designing and executing structural works that serve the general public, such as dams, bridges, aqueducts, canals, highways, power plants, sewerage systems and other infrastructure". Further, a 'structure' in the context of civil engineering refers to anything that is constructed or built from different inter-related parts with a fixed location on the ground. Accordingly, a civil structure would be any man-made structure which is built by applying the science of civil engineering. The materials used for construction of structures is irrelevant. A civil structure can be built with cement and steel or by means of other materials depending on the purpose of the structure and its feasibility. In the case of a landfill, the purpose is to dispose of hazardous waste and manage the leachate in order to avoid serious damage to the environment. Hence, the landfill is constr....