TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1326
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....resentation 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 Contract and Subsequent Adjustment of Advance in the Service Bills showing bo....
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....ying 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 connection with or incidental or ancillary to sub-clause (a); (c)............... (d) supply or acquisition of goods including capital goods and services in connection with commenceme....
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...., 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 construed as immovable property to cover it within the ambit of Section 17(5)(c) and (d) of the CGST Act. The Applicant understands that the Immovable property is not defined in GST Law. Section 3(26) of the General Clauses Act, 1897, provides for an expression as below: ""immovable property" shall....
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....lant & 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 deployed at the new factory premise. 10. The Applicant has also submitted that Apparatus, Equipment, Machinery are not defined under the GST Law. Hence, the inference is drawn to Mc-Graw Hills dictionary which defines these items as follows: "Apparatus - A compound instrument designed to carry out a specific function. Equipment - One or more assemblies capable of performing a complete function. Machine....
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....nsion 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 construction work if any. 30 Main Feeder Distribution The main feeder distribution system is used for electricity supply to utilities used in the production process. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible except for civil construction work if any. 31 Lighting System Work The lighting system works are used for illuminating the production floor. In absence of which production would not be possible. Relevant extracts of the Maharashtra Factor....
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....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 deny credit of taxes paid. Considering the above, it is the submission of the Applicant that the ITC must be eligible for the Applicant on the subject transaction. 16. In relation to the second query on the availment of ITC on advance portion paid, the applicant has submitted that as per the clause 8 of Contract, the Applicant has paid the Supplier an amount equal to 10% of the Contract price as an advance, upon issuance of Letter of Award. The Supplier has issued tax invoice for receipt of this advance payment ("first invoice'). However, there will be no actual supply of goods or services or b....
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....h 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 arises after the last date of availing the said credit as per as per Section 16(4). 20. Further, the Applicant has referred to the ruling of Hon'ble Allahabad High court in the case of M/s. Century Laminating company V/s. Commissioner of Central Excise, Meerut [2015 (3) TMI 130 - Allahabad High Court], wherein it has been held as follows: "when certain goods based on the invoice was received during the period of six months but the last and final lot was received after the period of six months, we are of the opinion that Rule 57D(6) now Rule 57G(2) of the Rules being procedural in nature does not dis-entitle the claim of the assessee....
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....ut 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 fixture/ panel portion and not on the civil work portion, based on the break up available under 'Cost Abstract' and 'Bill of Quantities' that forms part of the contract. They further stated that the ITC availed on the fixtures in question will not be utilized until an outcome to this application is provided. They cited the ruling of AAR, Maharashtra in the case of M/s. Nipro India Corporation (P) Ltd., in their support. 6.3 Owing to change in the constitution of the AAR bench, due to transfer and posting of one of the members of the bench, another opportunity for hearing was offered to the applicant, and Mr. Ranjit V Jolly, and Mr. Gowtham T, of M/s. Ernst & Youn....
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....nner 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 legal provision provides for entitlement of credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business, it also comes up with a rider, viz., "subject to such conditions and restrictions as may be prescribed". 7.4 It may be seen that the provisions of Section 17 of the CGST Act, 2017 discusses about the ITC that is blocked. The relevant provisions of sub-section (5) to Section 17, which impacts the issue in the instant case, is as given below :- "(5) Notwithstanding anything contained in sub-Section (1) of Section 16 and sub-section (1) of section 18, input tax credit shall not be available in....
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....e 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 machinery", the words "plant and machinery" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017; (ii) the Explanation shall be numbered as Explanation 1 thereof, and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely :- 'Explanation 2.- For the purpose of clause (d), it is hereby clarified that notwithstanding anything to the contrary contained in any judgement, decree or order of any court, tribunal, or other authority, any reference to "plant or machinery" shall be construed and shall always be deemed to have been construed as a reference to "plant and machinery",'." 7.7 With these aspects in mind, we now proceed to examine the transaction involved and its purpose, in order to det....
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.... 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 overhead racks and are not rooted in the ground/ floor rendering it immovable or not possible to be maintained; that in the instant case, all the electrical components and apparatus supplied vide the Contract are movable, customizable to add more equipment and maintainable in case of any repairs. Accordingly, the Applicant submits this Contract for erection of these electrical components does not fall under the ambit of immovable property as mentioned in Section 17(5)(c) and (d) of the CGST Act. 7.8.3 From the scope of the contract entered into between the parties, it could be seen that the agreement is not just for installation/commissioning of electrical works, and it is a composite one of 'Works Contract' Service involving "Supply, Installation, Testing and Commissioning of Electrical Works", as indicated in the table above, wherein the break-up of the cost involved on Supply and Installation of....
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.... 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'. However, it is to be noted that the categorisation as to Plant and Machinery', for the purposes of availment of ITC, is not to be determined as it is meant in general parlance, and that the same is liable to be determined strictly in line with the definition prescribed under the statute. Further, the expression 'Plant and Machinery' is to be considered in toto per se, and that the same cannot be seen as a Plant' as such, or as a Machinery' as such, or as 'Plant or Machinery'. Accordingly, the expression "plant and machinery" as defined in the explanation under Section 17 of the CGST Act, 2017, is taken to mean an - (a) apparatus, equipment or a machinery; (b) which are fixed to earth either by foundation or by structural support; (c) which are used for making outward supply of goods or services or both; 7.9.2 At this juncture, we take cognizance of the fact that the terms 'Apparatus', 'Equip....
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..... 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 advance ruling, the applicant had contended that the above said electrical works fall under SAC 995461 - Electrical Installation Services including electrical wiring and fitting services, fire alarm installation services leviable to GST at the rate of 18%. In this regard, we find that the contract of goods and services which are naturally bundled and supplied in conjunction with each other, as in the instant case, gets covered as a 'composite supply' as defined under Section 2(30) of the CGST Act, 2017, which is reproduced below :- "(30) 'composite supply' means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;" When the said composite supply involves a contract for building, construction, erection, installa....
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....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 factory, and not in relation to a specific machinery/equipment. (b) That the execution of the said project amounts to rendition of a composite "Works Contract" Service by the supplier, in as much as it involves supply of materials as well as supply of service including installation, testing, commissioning, etc. (c) That the output, viz., the electrical installation for the factory, results in a Permanent Work' of immovable nature to be delivered to the owner. (d) That the said output (electrical installation) cannot be considered as 'Plant and Machinery' as defined under the Act. Under the facts and circumstances of the instant case, we are of the considered opinion that the GST paid on the receipt of 'Works Contract' service involving electrical installations for the new factory project, do not become eligible for availment of ITC as they are blocked under clause (c) of the Section 17(5) of the CGST Act, 2017. Notwithstanding the same, even in the event of considering the said supply as an independe....