TaxTMI 
TaxTMI 
2025 (1) TMI 465
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....7 by the Assistant Commissioner, Central GST & Excise, Division I, Jamnagar, Rajkot CGST Commissionerate, [hereinafter referred to as 'appellant'] against the Advance Ruling No. Guj/GAAR/R/57/2021 dated 29.10.2021, passed by the Gujarat Authority for Advance Ruling [GAAR]. 3. The facts briefly leading to the present appeal is that M/s. Sikka Ports & Terminal Ltd., Admin village, MTF Area, Village Sikka, Gujarat 361140 [hereinafter referred [as the 'respondent'] is engaged in the activity of operating a port and terminal handling facility at Sikka Port for receipt of crude oil and other feedstock as well as for evacuation of various finished products of the crude oil refinery set up by Reliance Industries Limited ('RIL') at Jamnagar. They filed an application seeking Advance Ruling before the GAAR. 4. It was the respondent's case before GAAR that they had developed Sikka Port in 1990s as a captive port for RIL's refinery project; that the respondent (then known as Reliance Ports and Terminals Ltd.) entered into a long term contract with RIL on 26.3.2007 under which they were obliged to set up new facilities as described in Schedule 1 to enable it for provision of services desc....
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.... M/s. Sikka Ports & Terminals Limited, is entitled to avail Input Tax Credit (ITC) on services procured for hiring, and for operation and maintenance of Security Patrol Vessel used by it for supplying port and terminal handling services? 9. The respondent felt that the aforementioned questions ought to be answered in affirmative owing to the following viz • it receives services of hiring the SPVs as well as for operating and maintaining DSVs and SPVs: • that these services are eligible input services for availment of ITC, owing to the following reasons: (a) that they are essential for providing output services of supplying port and terminal handling services and are used in the course or furtherance of the applicant's business; and (b) they are not specifically blocked under any other provision of section 17 of the CGST Act; • that a combined reading of the amendment to section 17 (5) (aa) of the CGST Act, 2017, press-note dated 21.07.2018 & Sr. No. 17 of the annexure to the Agenda makes it clear that the said amendment seeks to only restrict credit in respect of vessels for personal use such as yachts, sailboats etc.: ....
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....g words to the provisions; • that section 17 (5) (aa), ibid, is unambiguous and there is no scope of stretching it; • that the impugned order, erred by ruling in favour of the respondent without assigning the nature of service; that as per section 17 (5) (ab), ibid the ITC on this nature of service is blocked; • that in terms of the proviso to section 17 (5), ibid, the service received by the respondent is with respect to repair and maintenance of vessels however the impugned order enlarged its scope by sensing essence and substance out of the same to confer benefit of ITC; • that the nature of service provided by the contractor to respondent includes service of hiring of vessel along with operation and maintenance of vessel and cannot be considered in isolation without considering entire nature of service involved; • that the SAC of input service received by the respondent is 998717, 996602 & 996609; it is evident that the ITC sought on the services is not falling within the same category of output services to make it available in terms of proviso to 17 (5) (b) (i), ibid: • the respondent it provides out....
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....e exception to the blocking provision u/s 17 (5), ibid, does not require that the vessels have to be used directly for transportation of goods; • that even if the principles of contextual interpretation were to be applied as espoused by the Hon'ble Supreme Court in the case of Aphali Pharmaceuticals [1989 (44) ELT 613 (SC)], it is evident that ITC blocked is only in respect of goods or services which are used for personal consumption; • that a plain and strict reading of 17 (5) (ab) clearly reveals that only services of 'repair and maintenance are blocked under clause (ab); that though there is an averment by Revenue that the services procured were repair and maintenance, there is no factual or legal basis: that in-fact GAAR came to a conclusion that the services in question were operation and maintenance & not repair and maintenance; • that the services procured by the respondent also include hiring of vessel in addition to operation and maintenance; • Proviso to section 17 (5) (b) clearly reveals that the outward supply can be any of the following three types [a] of the same category as the inward supply. [b] a....
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....Deodhar, Advocate appeared on behalf of the respondent, reiterated the submission given on earlier hearing. Shri Iyengar, Assistant Commissioner, submitted an additional submission dated 10.10.2024. 14. We have carefully gone through and considered the appeal filed by the Revenue/appellants their written and oral submissions made during the course of personal hearing the impugned order along with written submissions of the respondent. 15. The issue involved in this case is primarily eligibility of- (i) ITC in respect of services procured for the operation and maintenance of DSV owned by respondent and used for supplying port handing services; and (ii) ITC on services procured for hiring and operation and maintenance of SPV used in supplying port and terminal handling services. 16. Since the appeal deals with eligibility of ITC, sections 16 and 17 of the CGST Act, 2017 [relevant extracts], are reproduced below for case of understanding viz 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 se....
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....a, the ruling sought was specifically on eligibility of ITC in respect of [a] hiring services of SPV, and [b] services procured for operation and maintenance of DSV and SPV for rendering port and terminal handling services. The issue as is evident hinges around sections 16 and 17, ibid which is reproduced above. 18. What needs to be examined is whether the Act allows ITC on these two issues viz [a]services procured for the operation and maintenance of vessel; and [b] hiring of vessel. The primary contention of the Revenue is that the ITC is blocked. ITC in respect of services procured for the operation and maintenance of DSV and SPV 19. As far as the first issue ie ITC on services procured for the operation and maintenance of vessels [both DSV and SPV] is concerned, section 17 (5) (aa) which specifically deals with ITC on vessels [ie goods] would not be applicable in this case. 20. However, since this case pertains to services provided through the vessels, what is applicable is section 17 (5) (ab), ibid, which states that ITC shall not be available in respect of repair and maintenance in so far as they relate to vessels referred to in clause (aa), provided that the ITC ....
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....ration services of ports, docks, light houses, light ships, etc.]. 25. It is evident that section 17 (5) (ab) read with the proviso beneath, restricts ITC in respect of repair and maintenance of vessels. However, the proviso makes the ITC available if the vessels referred to in clause (aa) are used for the purposes specified therein. The respondent's counter is already mentioned in paragraph supra. We do not find much merit in it. GAAAR being a creature of the statute [ie CGST Act], is not permitted to either put words into the statute or stretch the statute. On a bare reading of the provisions, we find that as far as ITC of repairs and maintenance of vessels is concerned it would not be available to the respondent since the vessels per se [DSV and SPV] are not being used for transportation of goods. The respondent therefore will not be eligible for availing ITC on input services in respect of repairs and maintenance received by them. ITC in respect of hiring services of SPV 26. Moving on to the second issue ie eligibility of ITC in respect of hiring of vessel ie SPV [special patrol vehicle]. Section 17 (5) (b) (i), ibid states that the ITC shall not be available in respec....
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....PV and not hiring and that the respondents have not filed any appeal against it. 28. Revenue in the appeal before us has further stated that the nature of service received blocked by the provisions of section 17 (5) (b) (i); that the output service is of Port and Terminal Handling; that they have received input service of hiring of SPVS in respect of SPV Calipso Fortune & SPV ML Noorani; that the respondent raises the bill to RIL under port service or cargo handling service with SAC code 996751, while their input service received is under the SAC code 998717 (maintenance and repair services of fabricated metal products, machinery and equipment), 996602 (Rental services of water vessels including passenger vessels, freight vessels and the like with operator) and 996609 (Rental services of other transport vehicles nowhere else classified with operator); that the nature of input supply and output supply are altogether different & cannot be corelated as composite supply; that it is also difficult to establish any one supply as principal supply; that it is also not forthcoming form the invoices raised by the respondent as to whether the service they are providing falls under the defi....