TaxTMI 
TaxTMI 
2024 (3) TMI 319
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....cumstances of the transactions of the applicant, and the provisions of the GST Law relating to input tax credit, are there any ineligible credits that the applicant has taken in respect of certain supplies specifically listed in the statement of relevant facts in Annexure-1, which needs to be reversed. 4. Contentions of the Applicant: 4.1. The applicant submits that they had entered into two major contracts with Larson and Toubro Limited (L&T), ie, one is an EPC contract for constructing runway and another is a BOQ based contract for constructing a Passenger Terminal Building [PTB] in the airport. The construction had started during the pre-GST period and was in progress in to the GST period. The issue is related to the admissibility of input tax credit on services received from the supplier, Larson and Toubro Ltd (L&T) in connection with the construction of the said runway and passenger terminal. 4.2. The service provider L&T was raising running account bills along with applicable GST amount in connection with the works carried out under the above contracts. Other suppliers such as design engineers, project management consultants and similar service providers had also raised in....
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....n construction includes reconstruction, renovation, additions or alterations or repairs to the extent of capitalization to the said immovable property. Explanation: 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 4.6. The applicant submits that a perusal of Section 2(119) of the CGST Act shows that works contract contains 14 different types of activities in relation to an immovable property where there is a transfer of property in goods involved in the execution of works contracts. They are,- 1. Building 2. Construction 3. Fabrication 4. Completion 5. Erection 6. Installation 7. Fitting out 8. Improvement 9. Modification 10. Repair 11. Maintenance 12. Renovation 13. Alteration 14. Commissioning Therefore the activity of construction is only one of the 14 different activities included in Section 2(119) of the Act. 4.7. ....
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....2(119) and not cover the other 13 activities specifically mentioned. These different activities mention in Section 2(119) cannot be considered as synonyms and each activity specified is different from other activities. 4.10. Accordingly, the applicant submits that, ITC in respect of the following activities are not covered by blocked credits under Section 17(5) (c).- (a) Signage on the passenger terminal building (PTB) (completion activity). (b) Flooring work of PTB (completion activity). (c) Ceiling work /system of PTB (fabrication). (d) Partition work of PTB (fabrication). (e) Electrical equipment and fittings on PTB (fitting out). (f) Water supply system PTB (fitting out). (g) Finishing and plumping works PTB (completion). 4.11. Section 17(5) (c) includes in its ambit works contract service when supplied for construction of immovable property. The specific term used is for construction'. The term 'for construction' has a different meaning from the term "in relation to construction". The former term covers the activity of construction only, since the word "for" is more specific and restricted than the latter word 'in relation to' which has a mu....
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....of credit would impede the input tax credit claim process and disrupt the seamless flow of ITC which is not envisaged by the provisions of the law. Therefore an interpretation of section 17(5)(c) has to be made keeping in mind the objective of the GST legislation. The applicant also referred to the Hon'ble High Court of Orissa in the case of Safari Retreats Pvt Limited reported in 2019-TIOL-1088-Orissa High Court wherein the Court ruled that ITC would be available for GST paid during the construction of immovable property for the purpose of renting. 5. Comments of the Jurisdictional Officer: The application was forwarded to the jurisdictional officer as per provisions of Section 98(1) of the CGST Act. The Additional Director General of GST Intelligence, Central Excise Kochi Zonal Unit submitted Incident Report No. 01/2022-23 [GST] dated 04.04.2022 to the Additional Commissioner -1, State GST, Thiruvananthapuram in respect of the ineligible availment of Input Tax Credit on GST paid on the works contract services received by the applicant from Larsen and Toubro Limited for the construction of the Airport at Kannur which is an immovable property. It is stated that the applicant is l....
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....ltants etc had also raised tax invoices in relation to the construction of runway and passenger terminal building. 7.5. The contention of the applicant is that they are eligible for some portion of this credit, since it involves certain services like fabrication, completion, erection, modification etc which are outside the purview of blocked credit under Section 17 (5) (c) and (d) of the CGST Act. Further, it is submitted that some other input tax credit is eligible as it is received on account of inward supply in connection with the installation or the construction of plant and machinery and hence the same comes under the exclusion clause in Section 17 (5) (c) of the CGST Act. 7.6. The applicant on interpretation of the term "construction" included in the definition of the "works contract" under Section 2 (119) and in the explanation to Section 17 (5) (c) contends that they are eligible for ITC of tax paid on the following activities which are not covered by the expression "for construction of an immovable property" in Section 17 (5) (c) and hence outside the purview of credit blocked under the said clause. The activities listed are;- (a) Signage on the passenger terminal buil....
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....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. 7.10. The applicant has entered into two common contracts with L&T; the first one being EPC contract for construction of Runway with Basic Strip, Turning Pads, Taxiways, Apron, Access Roads, Drainage System, Related Retaining Structures, Formation of Platforms for Landslide Facilities, and installation of Airfield Ground Lighting System, Visual Aids for Navigation and Bird Hazard Reduction System etc and the other being for construction of Passenger Terminal Building [PTB] with ATC, substations, installation of HVAC system, Plumbing, Fire Alarm, Fire Fighting System, CCTV, PA system, Flight Information Display system, Interior Design, internal and external finishing, Building internal access control system, Hydro pneumatic pumping system for buildings, STP, and rain water harvesting system etc. Thus both the contracts are in the nature of composite supply of works contract services for construction of immov....