TaxTMI 
TaxTMI 
2022 (5) TMI 1134
X X X X Extracts X X X X
X X X X Extracts X X X X
....and Service Tax: (1) Whether in terms of Section 17 of the CGST Act, 2017 read with GGST Act, 2017, the LNG jetties proposed to be built by the applicant can be said to be covered within expression 'plant and machinery' as foundation to equipment, apparatus, machinery to be installed on it? (2) Whether as per Section 16 read with Section 17 of the said Acts, the applicant can accordingly avail 'input tax credit' of GST paid on inputs, input services as well as capital goods procured for the purpose of building the LNG jetties? 3. Before starting discussion, we reproduce extracts of Section 16 and 17 of the CGST Act, 2017, which are relevant to this appeal: SECTION 16. Eligibility and conditions for taking input tax credit. - (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 credit ledger of such person. ... ... ... ... ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) Names of plant & machinery mentioned in lower side of the above picture (from left to right): * Fire monitor tower * LNG/FSRU loading unloading arms (4 nos on both sides) * Fire monitor tower 5. The Gujarat Authority for Advance Ruling ['GAAR'] in its Ruling No. GUJ/GAAR/R/46/2020 dated 30.07.2020 ['Ruling' for short'] gave the following findings: a) The construction of the above jetties is nothing but a civil structure or an immovable property constructed on pillars or plinths extending from the sea shore to the deep sea. [Para 10.1 of Ruling refers] b) The GAAR referred the dictionary meanings of the term 'foundation' and observed that foundations are structures which are located below the ground and support the structures/buildings built above it. 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. The GAAR found that the jetties are just civil structures or immoveable property, which are akin to a building wherein the only diffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent and machinery are not involved in the outward supply of goods or services. [Para 11.5 of Ruling refers]. g) The GAAR further observed the apparatus, equipment and machinery are to be installed on the jetties, which do not appear to be covered under the definition of 'factory premises'. [Para 11.6 of Ruling refers]. h) Thus, GAAR concluded that the apparatus, equipment and machinery proposed to be installed by the applicant are not covered under the definition of 'plant and machinery' in terms of the Explanation to Section 17 [Para 11.7 of Ruling refers]. 6. In view of the above discussion, the GAAR held that the Jetties proposed to be constructed by applicant is civil structure and cannot be treated as 'foundation'; and not covered under definition of 'plant and machinery' as defined in the Explanation to Section 17. [Para 12 of Ruling refers]. Thus, the Gujarat Advance Ruling Authority has answered the questions raised by applicant, as under: Answer to Question 1: The LNG jetties proposed to be built by the applicant are not covered within the expression 'plant and machinery' as foundation to equipment, apparatus, machinery to be installed on it i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of regasification of LNG is to be undertaken in FSRU, which is in nature of floating Vessel and so, no foundation is required for plant and machinery installed in the FSRU. However, following equipments/structures are installed / to be installed on Jetties, as stated by the Appellant and mentioned in the Order of GAAR: • LNGC unloading arms / FSRU loading arms / HP gas unloading arms • Gang way towers • Cold drain tanks • Nitrogen Buffer Vessel • Fire monitor tower / Ground monitor • Air receiver • Dry Chemical Powder (DCP) Skid / AV / DV Skids • Jetty Substation / Instrument Rack Room ('IRR') Positioning of some of the above equipments/structures has been shown in the layout/picture given in Para 4 hereinabove. 10. The appellant submitted that the Authority for Advance Ruling had compared such foundation jetty to foundations of building; and pointed out that a foundation is a structure which is located below the ground on which a civil structure i.e. Building, is built; and similarly in their case held that the jetty is the civil structure like a building built on a found....
X X X X Extracts X X X X
X X X X Extracts X X X X
....expression as "Foundation" as well as structural support to equipment, appartus, plant & machinery, to be installed on the Jetties. 14. In light of the submissions, the appellant claimed that input tax credit of GST on inputs, input services as well as capital goods procured for the purpose of building the LNG Jetties should be available since LNG jetty is a foundation for plant & machinery. 15.1 Personal Hearing in this matter was held on 22.12.2020 through video conferencing. Thereafter, the appellant submitted further written submission dated 28.12.2020 regarding queries raised during the personal hearing. Gist of the same is as under: (i) Whether the LNG Jetty in question could be used for any other purpose like loading, unloading or handling of any other cargo, in case it was not used for regasification of LNG? • The answer is "No". The Jetty in question cannot be used for such other purpose mainly due to its design and layout. (ii) Whether the Jetty in question is inevitable for regasification plant, or regasification could be done at shore also where foundation and supporting stuctures in nature of LNG Jetty may not be required? â....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he same is not a civil structure falling under the exclusion clause. He stated that additional photographs of the jetty under constructions would be submitted. He concluded by requesting that all his submissions be considered and to allow his appeal. The appellant further vide their letter dated 07.04.2022 made additional submission wherein they stated the salient features of Swan Jetty at Jafarabad, submitted photographs of the Jetties being built and also relied upon the order of Hon'ble Gujarat High Court in the case of Mundra Ports & Special Economic Zone Ltd Vs. CCE & Cus. [2015(39)STR 726 (Guj.)]; and Andhra Pradesh High Court in the case of CCE, Visakhapatnam Vs. Sai Sahmita Storages (P) Ltd., [2011 (270) ELT 33 (A.P.)]. FINDINGS: 16. We have carefully considered the written as well as oral submissions made by or on behalf of the appellant viz. M/s. Swan LNG Pvt. Ltd. We find that the issue is related to admissibility of input tax credit in respect of construction of LNG jetties with reference to clause (c) and (d) of Sub-section (5) of Section 17; as well as the definition of the expression "plant and machinery", as per the 'Explanation' of Section 17 of the CGST / GG....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of Port Project upto 31st March 2021. Below is the progress on various EPC packages awarded by the Company: i. EPC for Jetties & Tug Berth by Afcons Infrastructure: progress is ~67.20% ii. EPC for Topside & Utilities by Black & Veatch: progress is ~96.64% iii. EPC for Breakwater and Shore Protection by Mantovani Dharti: progress is ~31.28% iv. EPC for Dredging and Reclamation Works by Mantovani Dharti: Progress is ~77% v. EPC for balance Onshore facilities work by Megha Engineering: Progress is~7.13% " 18. The appellant has submitted a copy of their EPC Contract dated 29.09.2018 with M/s. Afcons Infrastructure Ltd. ['M/s. Afcons' for short], which is relevant to the present appeal. The appellant has given the work of construction of jetties on EPC Contract basis to M/s. Afcons. In other words, the work of Engineering, Procurement, Construction and Commissioning is being done by M/s. Afcons. Under this situation, it appears that the material and services for construction are to be purchased/procured by M/s. Afcons and input tax credit on them, if admissible, would to available to M/s. Afcons, not to the appellant. The appellant is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....neer's Certificate dated 04.09.2020, which has been submitted by the appellant. Though Approach Trestle measuring to 90m of Jetty-2 has not been mentioned in the Annexure-1 to the Certificate of Chartered Engineer, it would be of similar use. The appellant, in their appeal dated 07.09.2020, inter alia mentioned that the LNG Jetties shall consist inter alia "Trestle to shore accommodating piping, cables and a roadway for personnel access and small vehicles." In respect of Approach Trestle, in Annexure-4 to the Chartered Engineer's Certificate dated 04.09.2020, only following Superimposed Dead Loads have been shown: "3.2 Approach Trestle 3.2.1. Dead Load ... ... ... ... ... 3.2.2 Superimposed Dead Load Cable Trays, Inspection and Maintenance walkways, Piping loading and Road furniture such as Kerb, Handrail etc. are assessed individually under the Superimposed Dead load." Thus, we find that the Approach Trestles are being constructed to accommodate piping, cable and also to be used as a roadway for personnel access and small vehicles. There is no mention about installation of any plant and machinery on the Approach Trestles of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d ... ... ... ... ... 3.2.2 Superimposed Dead Load Fire Monitor tower, Unloading Arms, Gangway tower etc., load can be assessed individually and will be treated as Superimposed Dead load." Hence not only piles, but the piles cap in form of unloading platform, is also to be treated as part of piles. The Unloading Platform and RCC Piles under it, cannot be termed as foundation of plant and machinery. When the same is specifically excluded under the expression "plant and machinery" in Section 17, we are of the view that Unloading Platform of Jetty in this case, can be treated as "land, building or any other civil structures", which are excluded from the scope of the expression "plant and machinery". Once a particular construction is cannot be treated as foundation or structural support of plant and machinery, such foundation and structural support is also to be treated as 'plant and machinery' by virtue of the statutory 'Explanation' to Section 17 of the CGST Act, 2017. Fire Water Tanks 2 Nos. (Sr.No.4 of Annexure-1) These Fire Water Tanks of total 11,000 cubic meter storage capacity, are to be constructed to shore, not on LNG jetties. Hence t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tioned in clause (i) would take colour from the preceding words i.e. land or buildings. We hold that LNG Jetties constructed over sea, fall under the term 'other civil structure' like land and building. Jetties are civil structure and very well covered under the exclusion clause. 25. As regards the appellant's argument to the effect that entire Jetty is required for their operations, we observe that requirement/essentiality of anything for providing outward supply, does not ispo facto make the same entitled for input tax credit. For example, land, building, other civil structures like jetty and pipeline laid outside the factory premises may be required and essential for making outward supply; however, input tax credit of GST paid on construction of the same is not admissible under the provisions of Section 17 of the CGST Act, 2017. Whereas, input tax credit in respect of immovable property, which is in nature of 'plant and machinery' including foundation and structural supports thereof, is admissible under the same provisions. 26. The appellant seeks a ruling as to whether LNG Jetties being built by them were in nature of 'plant and machinery' being foundation for equipment, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt machineries that will be installed on it and to allow the input tax credit on inputs, input services and capital goods to be used in the construction of said LNG Jetties. We find that LNG Jetties are nothing but civil structures and civil structures are excluded from the definition of foundation and structural supports. The foundation that is allowed in the definition of plant and machinery is that which fixes the plant and machinery to the earth making it immovable. If certain portion of LNG jetties is used for directly fixing plant and machineries then it will not make jetties foundation for plant and machineries but they are only in the nature of civil structures. The appellant has also not produced any evidence to substantiate their claim that LNG jetties which according to them are foundation of plant and machineries will be used for outward supply of goods or services or both. We have also examined the case laws relied upon by the appellant in their submissions and find that the facts of the case are not similar to the present case before us. 28. In view of the above discussion, we find that the LNG Jetties being built by the appellant are not in the nature of 'plant an....