TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1325
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....presentation 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, Thiruvallur, Chennai-600123 (hereinafter called as the "Applicant") are registered under the GST Act with GSTIN 33AAACL6155E1ZU. The Applicant has made a payment of application fees of Rs. 5,000/- each under sub rule (1) of Rule 104 of CGST Rules, 2017 and SGST Rules, 2017. 2. The applicant has sought advance ruling on the following questions, 1) Whether Input Tax Credit (ITC) is eligible on fire-fighting system and public heath equipment for expansion of factory for manufacturing activity? 2) What should be the basis to a....
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....he supply should be used in the course or furtherance of business.' 4.3. 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 commencement or closure of business; (e).................." Accordingly, the Applicant states that any acquisition of capital goods and services in connection with commencement of business is very much a business activity. 4.4. The Applicant states that, when this definition is read with the provisions of Section 16(1) of the CGST Act, as reproduced below (full text in Para 14): "........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 can be understood that such procurements which are intende....
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....,283 7 Public address system 46,15,914 8 Panel protection room 18,82,016 9 Miscellaneous works 3,40,020 Total 4,65,36,401 The Applicant submits that the items procured vide above table in relation with FFS are in the nature of plant and machinery and would rather not be considered as civil works to the factory. 4.7. The Applicant also provides below the table in relation to components involved in the supply related to public health engineering (PHE). S.No Particulars Amount (exclusive of GST) 1 Factory building & site works 1,22,45,466 2 Admin building 21,68,802 3 Canteen building 17,02,214 4 Security block 3,42,106 5 OWC Works 10,22,725 Total 1,74,81,313 4.8. The Applicant submits that all the civil work related to above procurement (buildings) was considered in civil package (S1. No. 1 of table in paragraph 11). The procurement made vide this Contract in relation with PHE are sanitary fixtures & fittings, sewage system, water supply system, rain water harvesting system, pumps, etc. The Applicant enclosed certain images relating to fire-fighting system and public health engineering with their application to provide a comprehensive understanding of....
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....ctory premises" 4.12. Hence, the term Plant and 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. 4.13. 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 Applicant states 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 - A mechanical, electric, or electronic device, such as a computer, tabulator, sorter or collator. Machinery - A group of parts or machines arranged to perform a useful function." 4.14. The Applicant also draws inference for the te....
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....low for ease of reference: "46. Canteens. - (1) The State Government may make rules requiring that in any specified factory wherein more than two hundred and fifty workers are ordinarily employed, a canteen or canteens shall be provided and maintained by the occupier for the use of the workers. (2) Without prejudice to the generality of the foregoing power, such rules may provide for- (a) the date by which such canteen shall be provided (b) the standards in respect of construction, accommodation, furniture and other equipment of the canteen; (c) the foodstuffs to be served therein and the charges which may be made therefor; (d) the constitution of a managing committee for the canteen and representation of the workers in the management of the canteen; (dd) the items of expenditure in the running of the canteen which are not to be taken into account in fixing the cost of foodstuffs and which shall be borne by the employer; (f) the delegation to the Chief Inspector, subject to such conditions as may be prescribed, of the power to make rules under clause (c)". 4.18. Further, the Applicant submits that these items are duly categorized as "Plant and Machinery" in its b....
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.... in comparison, with the Contract, the current supply under question covers the fire detection & alarm system, sewage system, sanitary ware & fittings and public address systems. Hence, the applicant contends that the ITC shall be eligible on the same. 4.20. The Applicant further refers the ruling of Hon'ble Delhi High Court in the case of Commissioner of Income-Tax vs Hindustan Times Limited [1999 (8) TMI 32 (Delhi)] wherein, it is held that the assessee is eligible for investment allowance with respect to fire-fighting equipment as the same would fall under plant and machinery. Relevant extract is reproduced below: " ... In so far as the claim of investment allowance on fire-fighting equipment was concerned, the Tribunal found that the fire-fighting equipment was in the industrial undertaking for the purpose of business of the assessee, which is printing and publishing of newspapers and magazines and, therefore, the requirement under Section 32A was satisfied. Accordingly, it allowed the said claim made by the assessee. ............ nature. Similarly, while allowing the claim of the assessee for investment allowance on the cost of fire-fighting equipment, the Tribunal has ....
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.... invoices (first invoice, one RA bill and one material bill) raised by the Supplier with their application along with highlighting the portion of adjustment which are discussed above. 4.24. The Supplier had raised the first invoice with respect to the supply under question in the FY 2022-23 (March 2023). However, the receipt of last invoice wherein the advances are fully adjusted, was issued in FY 2024-25. One of the conditions specified in Section 16(2) to avail ITC on invoices is the receipt of goods or services or both. 4.25. However, as per Section 16(4) of the 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." 4.26. 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 b....
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....ate were addressed to report if there are any pending proceedings against the applicant on the issues raised by the applicant in the ARA application and for comments on the issues raised. No remarks have been received from the Centre Authority as well as State Authority. Hence, it is construed that there are no pending proceedings on the questions raised by the applicant in their advance ruling application. Personal Hearing 6. The applicant was given an opportunity to be heard in person on 16.04.2025 vide this office memorandum No. 23/2024, dated 03.04.2025. Mr. Rajaram R and Mr. Gowtham T of M/s. Ernst & Young LLP appeared for the personal hearing as the authorised representatives (AR) of M/s. Shibaura Machine India Private Limited. The AR reiterated the submissions made in their application for advance ruling. They explained that the applicant is engaged in the business of manufacture of injection moulding machinery and its accessories. They stated that they are expanding its business operation and have constructed a new factory adjacent to its existing factory and has incurred capital expenditure towards procurements in relation to setting up of the new facility. The procureme....
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....elevant facts and the applicant's submission / interpretation of law in respect of question on which the advance ruling is sought. The applicant has sought for Advance Ruling on the issue of availing Input Tax Credit on GST paid on supply, installation of Firefighting Systems and Public Health Equipment in their existing factory. We find that the query is liable for admission as it gets covered under Section 97 (2) (d) of CGST/TNGST Act, 2017 under "admissibility of input tax credit of tax paid or deemed to have been paid". 7.2 We note that the applicant is engaged in the business of manufacture of injection moulding machinery and accessories. Since they are expanding their business operation, they have constructed a new factory adjacent to its existing 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 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....
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....e, or on receipt of any goods or service or both, when made for 'construction of an immovable property. 7.5 Further, the expression "plant and machinery" as defined in the explanation under Section 17 of the CGST Act, 2017, is extracted as below :- Explanation.- For the purposes of this Chapter and Chapter VI, the expression "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. 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....
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....e observe the following remarks, viz., "(3) The Contractor shall complete the Work and deliver the Permanent Work to the owner in accordance with the Contract, and the Owner shall make the payments of the Contract Sum as described in the Contract Agreement to the Contractor as per the terms of the Contract Agreement." 7.9. In addition to the same, under the 'Cost Abstract' of the Contract, a detailed break-up leading to arrival of total cost to components involved in the supply related to fire-fighting system (FFS) is as below; S No Particulars Amount (exclusive of GST) 1 Fire pump room equipment 51,78,561 2 Hydrant System 1,07,01,239 3 Automatic Sprinkler System 1,62,27,614 4 Fire Extinguishers 4,80,829 5 Signages 4,67,925 6 Addressable fire detection and alarm system 66,42,283 7 Public address system 46,15,914 8 Panel protection room 18,82,016 9 Miscellaneous works 3,40,020 Total 4,65,36,401 7.10. Further, the components supplied in relation to public health engineering (PHE) involves the following. S No. Particulars Amount (exclusive of GST) 1 Factory building & site works 1,22,45,466 2 Admin building 21,68,802 3 Canteen building ....
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....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 obviate the immovable nature of the item being accounted. 7.14. Accordingly, we now move on to discuss as to whether the resultant Fire-Fighting System and Public Health Engineering 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 tha....
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....actory in general. We are of the opinion that FFS and PHE are not capable of being used directly for making outward supply of goods or services or both. 7.18. 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 Sl.No.7 of the Statement of relevant facts furnished along with the application for advance ruling, the applicant had contended that the above said fire alarm installation services fall under SAC 995413 and are 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....
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.... and Machinery' as defined under the Act as they are not capable of being used directly for making outward supply of goods or services or both. 7.20. 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 the said 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/TNGST Act, 2017. Notwithstanding the same, even in the event of considering the said supply as an independent 'Construction Service, the same again stands blocked under clause (d) of the Section 17(5) of the CGST/TNGST Act, 2017. 7.21. At this juncture, we find that the applicant has relied on the case laws in respect of (i) the ruling of Authority for Advance Ruling, Maharashtra in the case of M/s. Nipro India Corporation Private Limited [2018 (10) TMI 745]; and in this regard, we wish to state that as per Section 103(1) of the CGST Act, 2017, advance rulings are applicable only to the applicant concerned. However, the persuasive effect that it brings to the context of the case shall be considered provided the fa....