TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 524
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....shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Ta....
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....be entitled to Input 'fax benefit under Sec. 16 of the CGST Act, 2017. 3. The Appellant had sought Advance Ruling on the following questions: Whether input tax credit of GST is admissible for supply of the following goods & services:- (a) steel, cement and other consumables etc., to the extent of their actual usage in the execution of the works contract service when supplied for construction of immovable property, in the form of the factory which is an Integrated Factory building with Gantry Beam, which in turn used for mounting across the pre-cast concrete beams, poles and over which the crane would be operated; (b) structures, Pre cast, reinforced concrete beams, poles etc. (purchased as it is) which are used as supports to mount and operate the crane over 10 metres from ground, as shown in the pictures attached; and (c) Other capital goods, like rails which are fixed over the concrete arms for smooth travel of the over-head crane. 4. The Advance Ruling Authority (ARA) pronounced the following rulings in Para 9 of the Order, as under: 1. Input Tax Credit of GST paid on Steel, cement and other consumables are not available for the appellant as per the findings at Pa....
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....them per-se or rails are also There is no provision under Sec. 98 of the CGST Act, 2017 for the ARA to dispose of an application in the manner that has been decided in the impugned order. The ARA having sought admitted the application for advance ruling on merits and also collected additional inputs in connection with such application for ruling from the appellants and the jurisdictional officers and therefore the ARA ought to have decided the issue on merits. The observations made in para 7.3. and 7.4 and the order passed as per para 9(2) are not consistent with the provisions of Sec. 98 of the CGST Act, 2017. 5.2 In so far as the ruling to deny the Input Tax Credit GST paid on steel, cement and other consumable are concerned, the ARA relies on the interpretation of the provisions of section 17 (5) (d) of the GS I Act in para 8.1. The definition of immovable property is neither reproduced nor any findings given thereon, although there is a reference to the General Clauses Act in para 8.1. 5.3 According to Section 3(26) of the General Clauses Act, 1897, immovable property includes "land, benefits to arise out of land, and things attached to the earth, or permanently fastened to....
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....ame, at best is an added measure to bear the load of the 'plant and machinery' installed in the factory. Therefore, the additional foundation/ beams are to be considered as any other civil structures '. Excluded from the explanation of 'Plant and machinery'." 5.6 ARA did not distinguish and differentiate the conventional factory from that of an integrated factory wherein the integrated factory served the main purpose of 'plant and machinery'. 5.7 The Appellant during the course of the personal hearing suggested that the ARA could personally visit the factory premises to understand the special attributes of the integrated factory and capture the differences between conventional factory and integrated factory. But ARA sought pictures in the form of drawing, photographs and supported by Cost/Chartered Accountant and Chartered Engineer's certificate. In para 3.2 and 3.3 these facts are acknowledged. 5.8 Moreover the scope and courage of section 17 (5)(c) and (d) were also highlighted by citing a Supreme Court decision as also a ruling on the very same ARA as brought out in para 3.3 (h). 5.9 Copies of the above rulings of the S.C in the case of Jayaswal N....
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....red whether the AR still insists on a physical hearing. The AR stated that he shall not insist on physical hearing and continued his submissions with regard to the merits of the matter. 6.2 The AR reiterated the submissions with regard to the issues raised before AAR. He stated the pillars are the one which hold the cranes at about 10m height and bears the weight. The overhead cranes runs on the rails placed on beams resting on the pillars which are part of the Integrated factory. He stated that they had sought ruling on their eligibility to ITC on the GST paid on steel/cement for such Integrated Factory if procured by them, but as the ruling was not forthcoming they had entered into Works Contract Services (WCS). He stated that they will require ruling on their eligibility to ITC on steel/cement/pre-cast sections etc required for the future phase of construction/expansion of the Integrated Building, which he claimed as a part of 'Plant and Machinery". The AR was asked to furnish his submissions in detail with specifics and the supporting documents on or before 20th July 2022. 6.3 In response the appellants have filed written submissions on 20.07.2022 stating that the finding....
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....estion is undoubtedly for "business" only. Yet, the issue of apportionment (between the inward Works Contract Service (WCS) supply attributable for the erection and operation plant and machinery, and that for factory side walls and roof) arises because the GST incidence on the input supply in question (the WCS received for construction of integrated factory) covers the fixation of plant and machinery to earth by foundation and structural support which inevitably doubles up as load-bearing structure for the roof and sidewalls (which are immovable property for which ITC may be said to be blocked). Such stronger structure is necessitated only to bear the additional load/ range of force and pressures that may arise to the structure on account of the movement of the overhead cranes by themselves and the weight (load of materials/components) that these cranes would be handling (while lifting, moving, shifting). The said foundation and structural supports are used to fix the apparatus, equipment, and machinery namely the gantry, the rails and the overhead cranes. (g) Appellant is admittedly procuring WCS only but the WCS provider procures his inputs viz. steel, cement and other consumab....
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....ure and the role of the structural reinforcements to the functioning of the over-head cranes in the manufacturing process. Nonetheless, since the Hon'ble Members expressed that they had seen such factories and understood the purpose of such incremental structural reinforcements, the prayer for physical hearing was not insisted upon. (k) According to section 95(a), advance ruling is in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. For the WCS and a few items required for the plant and machinery. 8 documents were supplied, which are at pages 2 to 9 of letter dated 06.12.2021, submitted to the Authority of Advance Ruling, which were part of the present appeal. These documents would indicate the SAC code as 9954 and HSN Code as 3402 & 8414. The documents for supply of Steel, Cement and other consumables would not be obviously there, as they were not directly purchased from the contractor as per the initial contract, but going forward for the expansion work, the appellant is contemplating. Therefore, advance ruling was not shut out by the non-furnishing of documents for transactions that have not taken place as ....
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....is not nearly a conventional factory but also a 'plant and machinery' meant to carry out manufacturing activity and that the claim of ITC [attributable to that part of integrated factory building which functions as 'Plant and Machinery'] is confirmed to be correct in law". 7.2 During the virtual personal hearing held on 15-07-2022, the Authorized representative of the Appellant made the submissions with regard to the issues raised before AAR. He stated that pillars are the one which hold the cranes at about 10m height and bears the weight. The overhead cranes runs on the rails placed on beams resting on the pillars which are part of the Integrated factory. He stated that they had sought ruling on their eligibility to ITC on the GST paid on steel/cement for such Integrated Factory if procured by them, but as the ruling was not forthcoming they had entered into Works Contract Service (WCS). He stated that they will require ruling on their eligibility to ITC on steel/cement/pre-cast sections etc. required for the future phase of construction/expansion of the Integrated Building, which he claimed as a part of 'Plant and Machinery'. 7.3 The issue raised before ....
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....received by a taxable person for Plant and Machinery that are used for making outward supply of goods or services or both. Hence, the contention of the appellant needs to be examined as to whether the integrated factory building could be considered as Plant and Machinery for the benefit of input tax credit. (iv) In the additional submissions made along with video clip of the construction of the factory building, the Appellant contended that they had procured WCS only, but the WCS provider procures his inputs viz. steel, cement and other consumables and for the expansion work, the appellant would subject to the outcome of the advance ruling on the eligibility of ITC, can take ITC for such future WCS contracts for the expansion works of identical nature. In this regard, section 17(5) (c) of the CGST Act, 2017 provides for blocking of input tax credit on works contract service for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Here, the appellant did not carry on the supply of works contract service and the eligibility or otherwise will be deliberated while examining the content....
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....e WCS provider procures his inputs viz. steel, cement and other consumables. Going forward, for the expansion work, the appellant would subject to the outcome of the advance ruling on the eligibility of ITC can take ITC for such future JVGS contracts for the expansion works of identical nature. Advance ruling sought is therefore valid and it need not necessarily be supported by receipt of the inputs in the name of the appellant." 7.7 In this regard, the point to be decided is whether the integrated factory building is plant and machinery or not. 7.8 In the case of the appellant, they have erected pillars, gantry beams, rails and beams for movement of overhead crane in the factory premises. The CGST Act. 2017 states that "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 exclude land, building or any other civil structures. 7.9 First we look into the question of whether the overhead crane fixed in the factory premises can be classified as plant and machinery. This crane is falling under HSN 84....