TaxTMI 
TaxTMI 
2025 (8) TMI 1326
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....ant by fraud or suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 5. The provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act (herein referred to as the Act) are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act. M/s. Shibaura Machine India Private Limited, No.65, P.O. Box No. 5, Chennai- Bangalore Highway, Chembarambakkam, Poonamallee Taluk, Tiruvallur-600 123. (hereinafter called as the "Applicant") are registered under the GST Act with GSTIN 33AAACL6155E1ZU. The applicant has sought advance ruling on the following questions: 1) Whether Input Tax Credit (ITC) is eligible on electrical works carried out for expansion of factory for manufacturing activity? 2) What should be the basis to arrive the timeline to avail ITC on tax invoice raised by Supplier to bill "Advance Component" of the Cont....
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....mmissioning of complete light fixtures 6 Civil Works 62,83,369 Associated miscellaneous civil works excavation & back filling and laying heavy duty pipes 2. The images of the above-said works have been attached, and that the Applicant is of the bona fide intention that input tax credit (ITC') arising out of invoices being raised on them for the above-mentioned supply is available to them. As per Section 16 of Central Goods and Services Act, 2017 ('CGST Act') & Tamil Nadu Goods and Services Act, 2017 ('TNGST Act'), goods or services or both should be used or intended to be used in the course or furtherance of the business. In the light of above-mentioned provisions, it shall be noticed that in order to 'avail ITC on any inward supply', the supply should be used in the course or furtherance of business.' 3. The term 'business' has been defined under Section 2(17) of CGST Act & TNGST Act in below mentioned manner: - "business includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connect....
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....such goods or services or both are used in the course or furtherance of business. Explanation.- For the purposes of clauses (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;" The Applicant states that the impugned supply under question is solely for the purpose of electrical works for the purpose of factory expansion and its associated miscellaneous civil works. The impugned Contract covers the scope of work such as supply, installation, testing and commissioning of all electrical works related to the plant and machinery deployed at the factory premises. The Applicant outlined certain instances of usage of equipment such as cranes, chillers, Lighting, Paint Booth, Pumps Operation, Testing Slots for Machine and Other Manufacturing Purposes inside the Plant. 6. Further the applicant has contended that the procurement vide this Contract (LT panels, busducts, electrical works, light fixtures) are movable in nature since the same can be removed without substantial damage and can be re-installed. Hence, this supply cannot be const....
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....ry 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". Hence the term Plant & Machinery with reference to Section 17(5)(c) & 17(5)(d) shall mean: i. Apparatus fixed to earth by foundation or structural support; ii. Equipment fixed to earth by foundation or structural support; iii. Machinery fixed to earth by foundation or structural support; iv. Foundation and Structural Support to Apparatus, Equipment and Machinery. 9. The GST Law specifically excludes plant and machinery from the ambit of works contract services/ construction related to immovable property, providing an eligibility to avail ITC on such supplies. The contents of the supply such as LT panels, busducts, electrical LT works, lightning protection and light fixtures are apparatus and equipment which supports of smooth functioning to the main and other ancillary machineries ....
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.... these items are duly categorized as "Plant and Machinery" in its books of accounts. These are currently parked in the "Capital Work-In-Progress" and would be capitalized in the books of accounts once the factory premises is commissioned. 13. The Applicant has referred to the ruling of Authority for Advance Ruling, Maharashtra in the case of M/s. Nipro India Corporation Private Limited [2018 (10) TMI 745], wherein, it has been held that ITC on all the electrical related works of its extension project is eligible to be availed except for civil works. Extract of relevant ruling is re-produced below for ease of reference. 28 Electrical Works Sub-Station Work Yes The sub-station is used for electricity supply for production / utilities for production. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible except for civil construction work if any. 29 DG Set Power Supply System The DG set power supply system is used for electricity back up for production / utilities for production Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible except for civil constr....
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....ub-sections 17(5)(c) & (d), ibid." The Applicant has highlighted that the same is applicable in its case as the electrical cables are being installed in the busducts that are laid in the factory premises for power supply to the machineries. Further, those busducts can be removed or opened for any kind of maintenance work that are required to be carried out and placed back. Accordingly, the Applicant submits that ITC is not blocked by limitations placed under Section 17(5)(c)/(d) and is eventually eligible to be availed. 15. The Applicant also places reliance on the ruling of Hon'ble CESTAT Delhi in the case of M/s. Steel Authority of India Ltd. v. CCE & ST Raipur, [2016 (343) E.L.T. 805 (Tri. - Del.)], wherein Tribunal allowed credit of taxes paid on light fittings/structures lamps, high mast light, tubes/glasses and allied fixtures as they are necessary for illumination and enable round the clock operation of the assessee's factory. According to the Tribunal, since the light structures are classifiable under Chapters 84, 85 and 9405 of the Central Excise Tariff, the fact that these fixtures become part of the civil structure/immovable property was no basis to den....
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.... CGST Act, "(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier." 19. In the instant case, on a plain reading, time limit to avail ITC on the first invoice raised by the Supplier shall fall on 30 November 2024. On the contrary, the Applicant would not have fulfilled the conditions to avail such ITC as the receipt of goods or services or both would fall after the above-said time limit. As per the doctrine of Harmonius Construction, a provision of the statute should not be interpreted or construed in isolation but as a whole, so as to remove any inconsistency or repugnancy. Moreover, it may be noted that the Section 16(2) contains a non-obstante clause overriding other provisions of Section16. Given the same, the provisions of Section 16(2) shall prevail in case of any conflict between Section 16(2) and other sub-sections of Section 16. Basis the above provisions, the right to avail ITC ar....
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....peared for the personal hearing as the authorized representative (AR) of the applicant, The AR reiterated the submissions made in their application. 6.2 They explained that the applicant is engaged in the manufacture of injection moulding machinery and its accessories. They further stated that the applicant is expanding its business operation and have constructed a new factory adjacent to the existing factory and has incurred capital expenditure towards procurements in relation to setting up the new facility. The procurement under this contract, like LT panels, busducts, Electrical works, light fixture are movable in nature and that the same can be removed without substantial damage and can be re-installed. When the Members enquired about the capitalization aspect, the AR explained that while the portion relating to civil work is capitalized as building, the other fixtures and electrical works are capitalized as 'Plant and Machinery' in their books of accounts. Likewise, when the Members enquired about the mode of availment of ITC, especially when the contract is a composite one involving both civil work and installation of goods, the AR explained that ITC is availed only on the....
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....they have constructed a new factory adjacent to their exiting factory, whereby they have incurred capital expenditure towards procurements in relation to setting up of this factory. We further take note of the fact that in the instant case, they have entered into a separate contract with the Supplier for "Supply, installation, testing & commissioning of Electrical Works" for the new factory. 7.3 To begin with, the relevant provisions of Section 16(1) of the CGST Act, 2017, that prescribes the eligibility and conditions for taking ITC, is reproduced below :- "(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." It could be observed from the above, that the most crucial phrase to the entire scheme involving availment of ITC is "used or intended to be used in the course or furtherance of his business". While the said l....
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....er civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Whereby it is evident that the expression 'plant and machinery' talks about an apparatus, equipment and machinery fixed to earth, either by foundation or by structural support, where we observe that the crucial phrase under the instant definition is "used for making outward supply of goods of services or both". 7.6 However, it could be seen from the provisions of section 17(5)(c) of the Act, that the phrase, viz., 'other than plant and machinery', finds a place under the said clause, from which it gets conveyed that availment of ITC on 'plant and machinery' is not blocked under the said provision. It is to be noted here that even the phrase 'other than plant or machinery' that was part of clause (d) of Section 17(5), now stands amended as 'other than plant and machinery', retrospectively with effect from 1.07.2017 onwards, through SI.No.124 of the Finance Act, 2025 (No.7 of 2025), which reads as below :- "124. In Section 17 of the Central Goods and Services Tax Act, in sub-section (5), in clause (d), - (i) for the words "plant or....
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....f installation have been furnished separately, as in the table below:- Amount (INR) Sl.No Description, Supply Installation 1 Section I - LT Panels 38,971,770 340,091 2 Section II - Busduct 34,241,141 4,944,412 3 Section III - LT Electrical Works 96,618,564 14,319,644 4 Section IV - Lightning Protection System 5,847,110 2,947,952 5 Section V - Light fixtures 14,812,190 2,508,896 6 Section VI - Civil Works 3,846,259 2,437,110 Subtotal Cost for Electrical Works 194,337,034 27,498,105 Total Cost for Electrical Works 221,835,139 7.8.2 We note that the Applicant has stated in the application filed by them that the impugned supply under question is solely for the purpose of electrical works for the purpose of factory expansion and its associated miscellaneous civil works. They have also contended that the contents of the supply such as LT panels, bus-ducts, electrical LT works, lightning protection and light fixtures are not embedded in the earth and is movable; that the electrical apparatus, cable works, panels, bus-ducts are placed on the overh....
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....nent Work to the owner in accordance with the Contract,", proves the case in point. 7.8.4 At this juncture, we note that during the personal hearing held on 16.04.2025, when the Members enquired about the capitalization aspect, the AR had stated while the portion relating to civil work is capitalized as building, the other fixtures and electrical works are capitalized as 'Plant and Machinery' in their books of accounts. In this regard, it is seen that the Accounting Standards prescribe accounting of revenue expenses and capital expenses. If the expenses are in the nature of capital expenses and are related to fixed assets, then they are capitalised. Merely, accounting an immovable property as a movable property or accounting a particular item under a different head, does not preclude the immovable nature of the item being accounted. 7.9.1 Accordingly, we now move on to discuss as to whether the resultant electrical installation for the factory gets categorised as 'Plant and Machinery' or not? In general parlance, an installation or even a factory is referred to as a 'Plant', and a Machinery is taken to mean 'A group of parts or machines arranged to perform a useful function'.....
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....ed to earth or supported through a structure. Whereas, the electrical installation in the instant case get assimilated into the building/infrastructure, thereby becoming a part of the immovable property. 7.9.4 With regard to the phrase 'which are used for making outward supply of goods or services or both', it could be seen that this phrase becomes the most crucial aspect of the definition of Plant and Machinery'. It conveys the fact that even in the event of considering the electrical installation as an apparatus, equipment or machinery, they should be used for making outward supply of goods or services or both. Since the electrical installation in the instant case does not perform a specific function as in the case of an apparatus, equipment or machinery, and as it just facilitates the functioning of the factory in general, we are of the opinion that it is not capable of being used directly for making outward supply of goods or services or both. 7.10.1 With regard to the aspect as to whether the transaction involved in the instant case qualifies as 'Works contract' or not, we note that under SI.No.8 of the Statement of relevant facts furnished along with the application for....
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....iz., M/s. SMCC Construction India Limited, related to the same contract (LOA dated 28.06.2023), furnished along with the application for advance ruling filed in the instant case, it is seen that under the Invoice No. TN/CO/23-24/055 dated 28.07.2023, for receipt of advance (10% of LOA), the 'Type of Services' has been specified as 'Construction Service' with SAC code : 995413, whereas in the case of Invoice No.TN/CO/23024/174 dated 06.03.2024, for the receipt of '4th RA for Monthly Progress Payment for the month of January 2024' the same has been specified as 'Installation Service' with SAC Code : 995461. Irrespective of the fact that different nomenclature has been assigned by the supplier for two different bills raised for the same contract, the fact remains that the instant case of the applicant ideally gets covered as a composite service of 'Works Contract' as specified under Section 2(119) of the CGST Act, 2017. 7.11 From the above, we infer the following aspects, in relation to the contract involved in the instant case, i.e., (a) That the Electrical LT works proposed in the contract is for the New Factory Project' which is a comprehensive one meant for the entire ....