TaxTMI 
TaxTMI 
2024 (3) TMI 319
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....owing: 3.1. Whether on the facts and circumstances 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....
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....movable 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. Explanation: For the purposes of clause (c) & (d) the expression 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 ....
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....l be deduced from the definition provided for works contract in section 2(119). This definition specifically mentioned 14 activities, in which "construction" is one among them, which means it has a different meaning and connotation than other 13 activities. In other words the word construction is used in section 17 (5) (c), which cover only the activity of construction as is used in section 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....
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....e runway, pavement markings and bird hazard reduction system. 4.13. Finally, the applicant concluded that one of the fundamental principles of the goods and services tax is the uninterrupted flow of input tax credit throughout the supply chain, from the supplier to the point of consumption across the country. The entire input tax expenses associated with construction on equipment and machinery are utilized against outward supplies in airport operations. Restricting the applicability and blocking the availability 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 provisi....
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....he applicant had entered in to two contracts with Larson & Toubro Ltd (L&T), one is an EPC (Engineering, Procurement and Construction) contract for constructing runway and another one is BOQ (Bill of Quantities) contract for constructing a Passenger Terminal Building (PTB). 7,4. The service provider L&T collected applicable GST through running account bills in connection with the works carried out under the above contracts. The applicant contends that some connected service providers like design engineers, project management consultants 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....
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.... is an input service for further supply of works contract service. Section 17(5)(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. Explanation: For the purposes of clause (c) & (d) the expression 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. 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 S....