TaxTMI 
TaxTMI 
2021 (1) TMI 1254
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.... Bhiwadi, Bhiwadi, Alwar, Rajasthan 301019 (hereinafter also referred to as 'the Appellant') against the Advance Ruling No. RAJ/AAR/2019-20/23 dated 21.10.2019. BRIEF FACTS OF THE CASE 3. M/s Indag Rubber Limited, SP 86-88, Industrial Area Bhiwadi, Bhiwadi, Alwar, Rajasthan 301019 is holder of GST Registration No. 08AAACI0868D1ZS (hereinafter refer as Appellant). The Appellant inter-alia manufactures precured tread rubber, un-vulcanized rubber strip gum, universal spray cement and tyre envelopes for the tyre retreading industry. M/s Elcom Systems Pvt. Ltd (hereinafter referred to as "Elcom") is a private limited company incorporated in India and is engaged in the business of repair, maintenance, overhaul, upgrade and modernization of Unmanned Aerial Vehicles (UAV). Elcom has approached Appellant for taking on lease a Maintenance Repair and Overhaul facility (hereinafter referred to as "MRO"). According to the agreement between the Appellant and Elcom, the Appellant will construct MRO facility at Bhiwadi as per the specifications given by Elcom. The said MRO facility will thereafter be given on lease to Elcom by the Appellant. Elcom will install its equipments in the MRO f....
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....er on M/s Akanksha Contracts Pvt. Ltd for supplying the goods and services for setting up of MRO facility. The goods are procured by M/s Akanksha Contracts Pvt. Ltd on a bill to ship to basis. In the invoice issued by the supplier, the bill to party is M/s Akanksha Contracts Pvt. Ltd. and ship to party is the Appellant. Against the material receipts, the Appellant has paid Rs. 97.37 lacs amount in advance for procuring of goods and services. Further, it has been agreed that M/s Akanksha Contracts Pvt. will raise a consolidate invoice for each month, which will include value of both goods and services so supplied along with adjustments regarding the advance so received. M/s Akanksha Contracts Pvt. Ltd is charging applicable rate of Goods and Services Tax (hereinafter referred to as "GST") on the goods and services being supplied to the Appellant. Further, when the Appellant will lease out the MRO facility to Elcom, it will be paying GST at applicable rate on the amount of rent received for leasing out of MRO facility. 4. The appellant has filed application for advance ruling before the Authority for Advance Ruling, Rajasthan whether the Appellant is eligible to claim credit of the ....
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....ity by not considering the submissions (oral as well as written) of the Appellant has violated the said principles (audi alteram partem). 6.1.5. Further, it is submitted that the Authority while passing the ruling has not given reasons and basis for such ruling. It is pertinent to mention that the Authority has merely recorded that the purposive dimension of the provision of Section 17 (5) (d) of the CGST Act is blocking of credit for construction of immovable property. However, the Authority has failed to substantiate this observation with any cogent reasoning. 6.1.6 It is submitted that it is a settled principle of law that non-speaking orders or the orders passed without recording the complete submissions and reasons for passing the final order are non-est in law. Thus, the impugned ruling being devoid of any reason/basis is non-speaking and thus, unsustainable in law. This further, establishes the fact that the impugned ruling is violative of principle of natural justice. 6.1.7. The Appellant submits that the principles of natural justice have been enshrined and regularly affirmed with the utmost favour by the Hon'ble Supreme Court and all other judicial flora. As per th....
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....eatures pointed out by assessee before them, in their final order. It is further submitted that in pursuance of directions given by Hon'ble CESTAT in the case of Commissioner of Customs (Import), Chennai vs. Do Best Infoway reported at 2016 (336) E.L.T. 156 (Tri. - Chennai) to CBEC to Issue appropriate guidelines for the quasi- judicial authorities to discharge their duties keeping in view the spirit of the ratio laid down by Apex Court in the case of Gordhandas Bhanji [1952 AIR 16 SC], the CBIC had issued guidelines vide Instruction F. No. 390/CESTAT/24/2016-JC, dated 13-4-2016. In para 5(d) of the said Instructions, the CBIC has categorically mentioned that the quasi-judicial orders have to be necessarily be the speaking orders recording every fact and reason leading to the final decision in the matter. Non-speaking orders or the orders passed without recording the submissions and reasons for passing the final order is nonest in law. In view of the aforesaid legal position, it is submitted that the impugned ruling has been passed in gross violation of the principles of natural justice as it fails to consider the submissions made by the Appellant and is passed without providin....
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....as may be prescribed; (b) he has received the goods or services or both. Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services,- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.] (c) subject to the provisions of section 41 or section 43A, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of g....
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....dule III deals with activities which are to be treated neither as supply of goods nor supply of service. 6.2.8. Sale of building inter alia is neither supply of service nor supply of goods by virtue of Entry no. 5 of Schedule III. Thus, on a combined reading of this provision alongwith the earlier paragraph, it can be said that in case if inputs/input services are used for construction of a building which is to be sold, restriction under Section 17(5) (d) will be applicable. 6.2.9. It is pertinent to mention that according to Entry No. 5 of Schedule II, renting of immovable property is a supply of service. Further, lease of building is also supply of service under Entry No. 2 of Schedule II. Accordingly, the Appellant at the time of renting the MRO facility will be liable to pay tax as the same is a taxable supply of service. Hence, the outward activity undertaken by the Appellant is a taxable supply. 6.2.10. In order to substantiate the understanding of the Appellant, reference is made to Circular No. 74/2018 dated 08.12.2018 which provides that credit will be available for construction materials, capital goods and input services used for construction of flats, houses, etc. whe....
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....Further, the petitioner would have paid GST if it disposed of the property after the completion certificate is granted and in case e property is sold prior to completion certificate, he would not e required to pay GST. But here he is retaining the property and is not using for his own purpose but he is letting out the property on which he is covered under the GST, but still he has to pay huge amount of GST, to which he is not liable. 20. In that view of the matter, in our considered opinion the provision of Section 17(5)(d) is to be read down and the narrow restriction as imposed, reading of the provision by the Department, is not required to be accepted, inasmuch as keeping in mind the language used in (1999) 2 SCC 361 (supra),the very purpose of the credit is to give benefit to the assessee. In that view of the matter, if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay under Section 17(5)(d) of the CGST Act. 21. In. that view of the matter, prayer (a) is required to be granted. However, we are not inclined to hold it to be ultra vires. ....
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....ailable for the construction of an immovable property even when such goods or services are used in the course or furtherance of business. However, no reasoning behind such observation is provided. The Authority has not provided any reason as to why the decision of Safari Retreats(supra) is not applicable. 6.2.23. The Authority has also observed that the interpretation of Section 17 (5) (d) of the CGST Act of the Appellant that it deals with unavailability of credit of inputs/ input services when output is not taxable, is implicit and one dimensional in nature and is not the intentional outcome of the said provision. In this regard, it is submitted that the decision of Safari Retreats (supra) and earlier advance ruling of K.P.H. Dream (supra) substantiates the view of the Appellant. The Authority also recorded that the purposive dimension of the said provision is blocking of credit for construction of immovable property. However, it is submitted that this observation of the Authority is without any reason and is against the principles laid down by the cases cited by the Appellant in its application. 6.2.24. It is submitted that the Authority observed that there are 2 phases in the....
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....e 9.2 of the sub-lease deed between the Appellant and Elcom provides that even if such sub-lease deed is terminated before the predetermined period, Elcom will make good the loss of the rentals till the Appellant finds a new tenant for the MRO facility. Therefore, it can be construed that the ultimate aim behind construction of MRO facility was only to rent it further and nothing else. 6.2.29. It has been observed by the Authority that the following case laws are not relevant in the present case as the facts are different from the facts referred in these cases:- * Tara Exports v. Union of India, 2018 (9) TMI 1474; * Eicher Motors Ltd. v. Union of India, (1999) 2 SCC 361; * Collector of Central Excise, Pune v. Daiichi Karkaria Ltd., (1999) 7 SCC 448. 6.230. In this regard, it is submitted that, the facts of the cases are although not similar to that of instant matter; however, the principle laid down in these cases is applicable in the instant case. Thus, the impugned ruling is liable to be set aside. 6.3. THE ACT OF NOT FOLLOWING THE ORISSA HIGH COURT JUDGMENT IN THE CASE OF SAFARI RETREATS IS A CASE OF JUDICIAL INDISCIPLINE. 6.3.1. It is submitted that the Appellant in t....
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....he jurisdictional i.e. Rajasthan High Court). It is submitted that Jurisdictional officer relying on the decision of Safari Retreats (Supra) submitted that credit is admissible. 6.3.6. It is submitted that reference is also required to be made to the judgment in the case of Shalu Synthetics Pvt. Ltd. v. CCE & ST, Vapi, 2017 (346) ELT 413 (Tri. - Ahmd.), wherein it has been held that the High Court decisions (in this case other jurisdiction) are required to be preferred over the decision of the Larger bench of the Tribunal. 6.3.7. In view of the judgments relied above and the submissions made, it is submitted that the Authority has erred in not relying on the decision in the case of Safari Retreats (Supra), wherein the facts and circumstances are similar to that of the instant matter. It is submitted that since no contrary view taken by any other high court including Hon'ble Rajasthan HC, by application of principle of stare decisis, the said judgment is squarely applicable on the Appellant. 6.4. THE ORISSA HIGH COURT JUDGMENT IN CASE OF SAFARI RETREATS IS FINAL AND VALID. 6.4.1. It is submitted that the Department has challenged the judgment of Safari Retreats (supra) befor....
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....al authorities. It is reiterated that the judgment in the case of Safari Retreats (supra) has not been stayed or set aside by the Hon'ble SC and thus, the Hon'ble AAAR is bound to follow the same. Thus, the impugned ruling is liable to be set aside. 6.5. The appellant has also made additional submissions (supplementary facts and additional grounds of appeal) on 04.11.2020 as under:- 6.5.1. A teaming agreement was signed between Israel Aerospace Industries Ltd. (IAI) and Elcom Systems Pvt. Ltd. (ELCOM) on 15 Jan 2018 for providing maintenance, repair and overhaul (MRO) and training services for the RPVs (Remotely Piloted Vehicles), also known as drones. As per this agreement, MRO activities concerning current UAV(Unmanned Aerial Vehicle) systems and new UAV systems shall be performed by ELCOM as a sub-contractor to IAI. Services to be rendered by ELCOM as per this agreement are as under:- (a) Field Activities:- - Maintenance of:- i) Unmanned Air Vehicle (UAV) ii) Ground Control Stations (GCS) iii) Ground SATCOM iv) "I" Level labs v) GSTE Repair and Calibration - Spare parts support - Quality assurance - Training and Certifications (b) Maintenance Cent....
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....m:- A brief on hangar, engine test room and Paint shop has been submitted and concluded that Engine test bench is not complete without the supporting infrastructure, specially designed structure of the Hanger is integral part of the repair and test set up of UAV and the complete structure of the paint shop acts as a paint booth in the MRO facility. 6.5.8. Annex Building:- Two Annex buildings (both side of Hangar) are being constructed to house the repair, training and office facilities as per the requirements laid out by IAI. These are double story RCC buildings, facilities being constructed in these building are as under: Left Hand Side(LHS) Ground floor (Workshop/Labs) Right Hand Side(RHS) Ground floor (Workshop/Labs) Structure Repair Shop Measuring Room Trimming Room Battery Room Textile Material Cut Room Propeller Calibration Room GSE Maintenance Shop Carburetor Room Electrical Maintenance Shop Propeller Shop Mechanical Maintenance Shop Engine Shop Store Tool Room Trimming Room Crew Room Inflammable Material Store Server Room SAR Lab GCS Lab Wiring Shop First Floor First Floor Training Area including Simulator facility fo....
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....ical blind as essential part of the simulator. Only the simulator equipment will not complete the setup and it can't be housed in an ordinary building to complete its desired function. 6.5.13. Customised MRO Infrastructure:- Complete MRO Infrastructure is customised as per the requirement specified by IAI. FRDs provided by IAI remains the guiding factor for all architectural design by CPKA. Some of important points to establish these facts are as under:- a) The infrastructure is built for MRO of RPVs supplied by IAI to various defence forces. b) Since the facility is equipment specific, floor space for each workshop, door opening, corridor space, turning radius etc are specifically mentioned by IAI. c) Even location of electric points and type of sockets required in each point is specified by IAI. d) Each drawing have been vetted and approved by IAI. e) IAI team visited the site multiple time to supervise the construction. 6.6. The AAR has not applied the law relating to exclusion of credit in section 17(5)(d) of CGST Act. This provision does not block credit in respect of immovable property that satisfies the description of plant and machinery. The structures being....
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....are differential treatments for plant and building. It may so happen that a building may also be regarded as plant. A building is not a plant when it is used as a setting or shelter in which business is carried on. But if the building is used as a tool for carrying out the business operation, and not merely as a setting/shelter, it should be given the status of plant. In CIT vs. Dr. B. Venkata Rao, (2000) 111 Taxman 635 (SC), the Supreme Court explained that if it was found that the building or structure constituted an apparatus or a tool of the taxpayer by means of which business activities were carried on, it amounted to a 'plant'; but where the structure played no part in the carrying on of these activities but merely constituted a place wherein they were carried on, the building could not be regarded as a plant. 6.6.7. The Supreme Court, Scientific Engg. House (P.) Ltd. v. CIT, (1986) 157 ITR 86 (SC), explained the meaning of plant, citing several rulings of India and UK: 11. The counsel for the assessee urged that the expression 'plant' should be given a very wide meaning and reference was made to a number of decisions for the purpose of showing how quite a ....
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.....It seems to me that every part of this dry dock plays an essential part.... The whole dock is I think, the means by which, or plant with which, the operation is performed." (p. 67) Lord Guest indicated a functional test in these words: "...In order to decide whether a particular subject is an 'apparatus1 it seems obvious that an enquiry has to be made as to what operation it performs. The functional test is, therefore, essential at any rate as a preliminary...." (p. 75) In other words, the test would be: Does the article fulfill the function of a plant in the assessee's trading activity? Is it a tool of his trade with which he carries on his business? If the answer is in the affirmative it will be a plant. [Emphasis added] 6.6.8. The Supreme Court, in CIT v. Dr. B. Venkata Rao, (2000) 243 ITR 81 (SC), considered a building, in which nursing home was run, as plant and observed,- "2. The assessee is a medical practitioner. He runs a nursing home. In respect of the building in which the nursing home is run, the assessee claimed, for the asst. yr. 1983-84, that it was a "plant". His contention was rejected by the ITO and by the CIT (A). The Tribunal found to the cont....
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.... Race Channel. It explained that the process of generation started from letting in water from the reservoir into the pen-stocks and ducts which were the water conductor system into the turbines. Once electricity had been produced by generation, it had to be conducted, as it was not possible to store the same, and the process of generation continued until the electricity was led to the transmission tower. The water that was used for rotation of the turbines had to be removed and this was done through the Tail Race Channel. For stepping up the electricity, transformers were used in the outdoor yard. The conduction of the electricity was through conductors held in ducts, called the Cable Duct System, which were specifically designed for the purpose. The case of the assessee, therefore, was that all these were part of the special engineering works that were an essential part of a generating plant and, therefore, it was entitled to have the same treated as a plant for the purposes of investment allowance. The Commissioner accepted the correctness of the assessee's case. He held that it was clear that the generating station buildings had to be treated as a plant for the purposes of i....
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....ing 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. The third question is answered in the affirmative and in favour of the assessee." 6. We find that the judgment dated 14.10.2004 rightly rests this case on 'functional test' and since the ponds were specially designed for rearing/breeding of the prawns, they have to be treated as tools of the business of the assessee and the depreciation was admissible on these ponds. We, thus, decide the question in favour of the assessee and as a consequence, appeals of the Revenue are dismissed and that of the assessee are allowed.' 6.6.10. The appellant also placed reliance on Cachet Pharmaceuticals (P.) Ltd. vs. CIT, (2017) 82 taxmann.com 82 (Patna), Schofield (H.M. Inspector of Taxes) vs. R. & H. Hall Ltd. (1965-1975) 49 TC 53, Cooke v. Beach Station Caravans Ltd., Ch D 1974, [1974] STC 402; [1974] 1 WLR 1398; [1974] 3 AH ER 159, 6.6.11. All the structures put up in the MRO facilities are designed for ELCOM's purposes and according to its specifications, the designs of the buildings are ....
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....crane with loading capacity of 1.5 ton, being installed. Trusses of the hanger roof have been designed to take the load of the crane. Load of the came further gets transferred to foundation from trusses through columns. (c) Utility of the Crane: The underslung crane, apart from material shifting, works as a testing and calibration aid for the RPVs. Balancing of RPVs, a critical flying test requirement, is achieved by suspending the assembled RPV in air by the crane. It would be evident from the above that the specially designed structure of the Hangar of MRO is integral part of the repair and test set up of UAV. 6.6.14. Paint Shop: An aviation standard painting facility is being set up in the MRO facility. Most of the general purpose paint shops used in the industries, are container based, where, the paint shop manufactures supply painting equipment mounted in a prefabricated the container. In the MRO facility, the paint is being built to the specific design of OEM as combination of concrete building and associated equipment. A few important features of the Paint Shop are as under:- (a) Paint Shop, approx, area 415 sqm, consists of three shops, i.e. Painting Preparation Shop....
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....le complex, including the structures and equipment is the MRO business that would come into existence. The appellant would play an initial role in constructing the structures to an extent. Once completed, the entire complex, including all the buildings should be treated as plant for the purpose of section 17(5)(c) and (d). 6.6.17. As explained earlier, a building or structure which is only a setting or shelter in which business is carried on is not plant, but where the building is so designed that it contributes to the operations of the business, it is a plant. In Dwarka Prasad v. Dwarka Das Saraf, (1976) 1 SCC 128, the Supreme Court was considering whether a cinema hall, built and adapted for screening films for application of rent control law. The entire building and cinema projector, accessories and the like were leased. Later, the landlord wanted to evict the lessee. The Court held that the protected category under the law was for "accommodation". A lease of an "accommodation" must essentially be of a building not of a business or industry together with the building in which it is situated. 6.6.18. The Bombay High Court, in Purushottam Rambhao Khandwekar v. Gangadhar Mansin....
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....on. It was to decide whether transaction was lease or mortgage. The proportion between the amount advance and the value of the property is one of the important tests to be taken into consideration in deciding the nature of the transaction. Where the amount advanced bears a substantial proportion to the value of the property it is an important element indicating that the intention was the creation of a mortgage and not a tenancy, it held on the facts of this case. 6.6.22. For convenience, ELCOM has required the appellant to construct the bare structures of the buildings before leasing and then ELCOM would complete the setting up of the MRO facility. On completion, the complex can be considered as a plant. Both the clauses (c) and (d) of sub-clause 5 of section 17 use the expression "services ....... for construction of an immovable property (other than plant and machinery) The expression "for" used before "construction of an immovable property" means that each service need not result in construction of an immovable property. In Indian Chamber of Commerce vs. CIT, (1976) 1 SCC 324, the Supreme Court has explained that "for" used with the adaptive principle of a verb means "for t....
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....turn on the initial outlay. 6.7.3. The construction is to be done as per the specification of ELCOM. ELCOM would do business with IAI. The design specifications of the buildings and facilities are given by ELCOM. Officers of both ELCOM and IAI regularly visit the site to see that the construction is going on as per their requirement. This shows that the appellant would work like a contractor for erecting structures primarily for the purpose of ELCOM's business operation. 6.7.4. The appellant would not bring into existence complete MRO facility ready to give service. ELCOM would do all finishing work and installation of machinery and equipment to make it ready for operation. Thus, the building structures are constructed keeping in mind the machinery and equipment that would be installed by ELCOM. 6.7.5. The appellant has no experience in MRO service business, nor has it any plan to embark on such activities after the present arrangement ends. To secure its interest, it has struck a bargain in such manner that it would get a decent return during the 9-year lock-in period. The rent per month is Rs.54,00,000 in the first 3 years, Rs.60,48,000 in the next 3 years and Rs.67,73,760....
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....s being used as a tool by ELCOM. The entire structure has been constructed as per the specifications given by ELCOM. The officers from ELCOM and IAI are visiting the site of construction from time to time to supervise the process. On several occasions, they have directed the appellant to make modifications to suit the requirements of ELCOM. Actually, the appellant has been constructing the structures on account of ELCOM and not on its own account. ELCOM was ' participating right from the stage of preparation of the architecture, engineering and design of the management of the project. The appellant was merely funding the cost of the project and organising the construction activities. 6.7.10. Apart from the appellant undertaking the construction of the MRO infrastructure buildings, IAI (the Original Equipment Manufacturer of the Remote y Piloted Vehicle), ELCOM, RSA Associates (owner's engineers) and CPKA (architect and project management consultant) are involved in the construction project. 6.7.11. Throughout the planning of the project and its execution, ELCOM and its client, IAI, were involved in directing the appellant to undertake construction activities as per their ....
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.... Lifts were designed as per the dimensions of the equipment which will have to be moved to training area. Email from Mr Rami Cohen dated 14 Mar 2019 has detailed requirement of firefighting equipment as per the aviation standard and equipment requirement at various area. Email from Mr Rami Cohen dated 28 Mar 2019 contains detailed illumination required at various repair workshops. Complete requirement of lighting at various shops in the facility have been customised as per the requirement laid down by IAI. 6.7.16. With the e-mail dated 18 Apr 2019, Mr Rami Cohen has forwarded revised FRD of Engine Run-up test bench. As brought out earlier that the entire MRO facility was designed, developed and constructed based on the FRD provided by IAI (OEM) to suite the requirement of repair and overhaul of RPVs supplied by the OEM to Indian forces. FRD was revised during the course design and construction. IAI planned a new engine for the RPVs accordingly the Engine Runup test bench design was changed by IAI and a revised FRD was issued. 6.7.17. Series of emails from Mr Rami Cohen in Dec 2019 and Jan 2020 towards vetting and approval of electrical drawing. Requirement of power connections so....
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....ansaction and relationship between the appellant and ELCOM, the parties have executed MRO Facility Agreement on 21.10.2020, which will take effect from 01.01.2021. PERSONAL HEARING 7. A virtual hearing in the matter was held on 19.01.2021. Sh. P.K. Sahu, Authorized Representative of the appellant has attended hearing on 19.01.2021. He reiterated the submissions already made under grounds of appeal. He also submitted his submissions on 21.01.2021 on the query raised during hearing which is as under:- 7.1 During the hearing of the appeal fixed on 19.01.2021, the Hon'ble Authority, after perusing significantly higher number of documents or evidences filed along with the appeal, desired to know as to whether the evidences or documents submitted along with the appeal were placed before the original authority, it was informed by the counsel of the appellant that substantial number of such evidence/documents were not placed before the original authority. The members of the authority wanted to know from the learned counsel of the appellant as to whether substantial evidences can be adduced at the appellate stage, for which he had no immediate reply; but informed that the same would ....
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....hat they had not argued anything new which was not in the application before the Hon'ble AAR. Our contentions all along are: (i) that we are not hit by section 17(5)(d), and (ii) that when our output service is taxable we are entitled to credit of the tax on input services, as has been held by Hon'ble Orissa High Court in M/s Safari Retreats Pvt. Ltd. and Anr. vs. Chief Commissioner of Central Goods & Service Tax & Ors., 2019 (25) G.S.T.L. 341 (Ori.), DISCUSSION AND FINDINGS: 8.1 We have carefully gone through the Appeal papers filed by the Appellant, the Ruling of the AAR, Rajasthan, written as well as oral submissions made by the authorized representative(s) of the Appellant, at the time of personal hearing held on 19.01.2021 and in his subsequent submission dated 21.01.2021. We also find that though the ruling of AAR, Rajasthan was given on 21.10.2019 and the appeal was filed online, all relevant documents, etc were given on 04.11.2020. As such, the appeal should be decided within 90 days from 04.11.2020 i.e 01.02.2021. 8.2 From the facts of the case, it would emerge that the appellant was approached by Elcom for taking MRO facility on lease. According to the agreemen....
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....d by it. iii. The act of not following the Orissa High Court judgment in the case of Safari Retreats which is final and valid, is a case of judicial indiscipline. 8.6.2 Subsequently, on 04.11.2020, the appellant has submitted substantial documents and evidences in the form of copy of contracts, agreements, layout plans, etc. these evidences are listed as under a. Copy of Statement of works (pages 5, 34 to 38) b. Copy of email dated 13.06.18 (page 39) c. Copy of Minutes of meeting 16-17.07.2018 (pages 4, 40 to 43) d. Copy of project report submitted to RIICO (pages 10, 44 to 53) e. Copy of site lay out plan (page 54) f. A brief on hanger, engine test room and p shop (pages 2, 55 to 56) g. Copy of lay out plans (pages 27, 57 to 83) h.Copy of FRD for MRO (pages 72, 84-157) i. Copy of Agreement dated 21.10.2020 (pages 18 186 to 203) j. Copy of email, minutes and other (pages 28, 158 to 185) 8.6.3 As we proceed further, it becomes incumbent on our part to bring out the legal position as exist on date regarding production of substantial additional documents at the appellate stage. The provisions of relevant Rule 112 of the CGST Rules 2017 is reproduced below- "1....
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....not travel outside the record of the lower court and additional evidence, whether oral or documentary is not admitted but Section 107 C.P.C., which carves out an exception to the general Rule, enables an appellate court to take additional evidence or to require such evidence to be taken subject to such conditions and imitations as may be prescribed. From the facts of the case and the relevant provisions as contained in the rule 112 as referred to above, the additional substantial evidences cannot be allowed to be relied upon at the appellate stage. 8.7 Before we delve deep to decide the case, it would be proper in the fitment of justice to discuss the relevant provisions of the statute which are as under- Section 16 (1) and (2) of the CGST Act "Eligibility and conditions for taking input tax credit. 16.(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic ....
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....ing or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises 8.10 Bare reading of the above provisions makes it clear that the restriction imposed herein is absolute in nature as it seeks to override Section 16(1) which entitles a registered taxpayer to avail credit on goods or services used or intended to be used in the course or furtherance of business. Irrespective of the fact that the goods or services are used for construction of immovable property which in turn will be used for conducting business, credit is not available; if the ownership of the property remains with the said person. The legislature, in his wisdom, think it proper to stop the flow of seamless credit once immovable property comes into existence and the ownership is fixed. 8.11 Let us put the issue in proper perspective. Generally, credit is available to the developers who are engaged in construction of immovable property because they are not engaged in construction on their own account but on behalf of others as the constructed portion / super-structure belongs to the buyer with whom agreement has been entered into. In such cases, the transactio....
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.... a civil structure or building as 'plant' for purpose of ITC in GST. 8.14 Moreover, the expression 'plant and machinery' is specifically defined in the explanation below Section 17(6) of the CGST Act, 2017. In the definition, after the term 'Plant and machinery' the word 'means' is used unlike in explanation below Section 17(5)(d), where the word 'includes' is used after the term "construction". As per the principle of interpretation of law laid down by the higher judiciary, the definition using the term 'means' has to be strictly construed to mean only what is stated therein, nothing more, nothing less. Our above view finds support from the judgment of Kerala High Court in the case of Kerala Public Service ... vs State Information Commission dated 9 March, 2011 wherein the Hon'ble High Court has observed as under,- "--- The Honorable Supreme Court stated in Hariprasad Shivshanker Shukla v. A.D. Divelkar [AIR 1957 SC 121], that "There is no doubt that when the Act itself provides a dictionary for the words used, we must look into that dictionary first for an interpretation of the words used in the statute. We are not concerned ....
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....ing from the particular context from which it has been used. Justice G.P. Singh in the Principles of Statutory Interpretation (Thirteenth Edition) Chapter 7 page 485 has stated as follows: "The word 'or' is normally disjunctive and 'and' is normally conjunctive but at times they are read as vice versa to give effect to the manifest intention of the Legislature as disclosed from the context. As stated by Scrutton L.J, "You do sometimes read 'or' as 'and' in a statute. But you do not do it unless you are obliged because 'or' does not generally mean 'and' and 'and' does not generally mean 'or'. Further as pointed out by Lord Halsbury, the reading of 'or' as 'and' is not to be resorted to, "unless some other part of the same statute or the clear intention of it requires that to be done". Where provision is clear and unambiguous the word 'or' cannot be read as 'and' by applying the principle of reading down. But if the literal reading of the words produces an unintelligible or absurd result 'and' may be read for 'or' and 'or' for 'and' even though the result ....
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....th adjustments regarding the advance so received. We observed that as construction activity will be done on appellant's plot and payment for it is being made by appellant, consequently expenses and assets related to MRO facility will be shown in financial statements of appellant, therefore, mere construction of any civil structure with specific purpose under supervision of service receiver cannot be construed to be on other's account and that the ownership of the property is transferred to the other person. We find no force in the contention of appellant that the appellant is not constructing the structures on its own account, therefore, construction of MRO facility fully covered in exclusion clause as stipulated in section 17(5)(d) of the CGST Act, 2017. 8.17 As discussed above, in view of specific exclusion mentioned under Section 17(5) (c) & (d) of CGST Act, we conclude that ITC is not available for construction of an immovable property even when such goods or services or both are used in course or furtherance of business. 8.18 Lastly the appellant has stressed upon the judgment rendered by the Hon'ble High Court of Orissa in the case of "M/s. Safari Retreats Pvt. ....