TaxTMI 
TaxTMI 
2025 (8) TMI 1325
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....cant 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, 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 fa....
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..... 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.' 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 furt....
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.... 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 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 ....
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.... 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" 4.12. 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 item....
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....quately trained in the routine to be followed in such cases. (3) The State Government may make rules, in respect of any factory or class or description of factories, requiring the measures to be adopted to give effect to the provisions of sub-sections (1) and (2)". 4.17. Further, the works related to PHE are also mandated under The Factories Act, 1948 read along with The Tamil Nadu Factories Rule, 1950, as amended from time to time. Relevant text from Section 46 of The Factories Act, 1948 is reproduced below 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....
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....pply System Yes The gardening water supply system is used to supply water to the garden in the factory premises. Relevant extracts of the Maharashtra Factories Rules. 1963. Not admissible as not used in course or furtherance of business and as per restrictions in Section 17(5) of the GST Act. 8 Sanitary Ware and CP fittings Yes Before entering production floor, every worker is required to pass through a cleanroom where he is required to wear the appropriate protective gear and wash hands for sanitation purposes. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible Seeking inference from the above ruling and 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 res....
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....udes only once the last invoice is raised by the Supplier wherein such advance is concluded to be fully adjusted. 4.23. The Applicant states that the Supplier once commences to execute the Contract starts to issue his subsequent invoices ('running bills' or 'RA bills') based on completion of payment milestones as defined in the Contract. When the Supplier starts to raise the RA bills, he has three components which is gross billing, adjustment of advance (raised in the first invoice), and the net billing. In the instant case, the Supplier has adjusted 10% of the gross amount on all RA bills as the mobilization advance which was paid during the time of issuance of first invoice. The Applicant enclosed the sample copies of 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 ava....
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....input tax on receipt of supply of goods or services or both against an invoice irrespective of the receipt of supply after the last date under Section 16(4) of the CGST Act. Without prejudice to the above, with the above said time limit (on a plain reading) fast approaching as on the date of filing this present application, the Applicant sought to secure the Input Tax Credit on the invoices as a precautionary measure by availing it in the GSTR-3B return of the tax period - October 2024, with respect to all the invoices. Nonetheless, they have assured that the credit will not be utilized until an outcome on this application is provided. 5. The applicant is under the administrative control of State Tax. The concerned authorities of the Centre and State 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....
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....page 547 of the application for advance ruling filed pertaining to Fire Fighting Systems and Public Health Engineering Systems installed in the new factory premises. They explained that the Fire Fighting Systems include Fire hydrants, sprinkler system, etc and Public Health Engineering includes Pipelines for Waste clearance to ensure a safe and secure environment for workers. In this regard, they further stated that under page 15 of the application filed, the details of relevant items are furnished under B1, C1, C3 & C4. 7. Discussions and Findings: 7.1 We have carefully examined the submissions made by the applicant in their advance ruling application and the submissions made during the personal hearing. We have also considered the issue involved, the relevant 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....
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....ere it is an input service for further supply of works contract service; (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 clauses (c) and (d), the expression "construction" includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property:' Accordingly, it becomes clear that the embargo in relation to availment of ITC in the instant case revolves very much around clauses (c) and (d) of Section 17(5) of the Act, ibid, and both the clauses restricts ITC availment on receipt of Works Contract service, 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 appa....
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.... case of the applicant are :- (i) Whether the execution of project in the instant case results in the creation of an immovable property or not? (ii) Whether the resultant fire-fighting system and public health equipment installation for the factory gets categorised as Plant and Machinery' or not? and (iii) Whether the execution of the project qualifies as 'Works Contract' or not? 7.8. In this regard, we note that the applicant has entered into a Contract Agreement with M/s. SMCC Construction India Limited, New Delhi for installation of Firefighting System and Public Health Equipment to come up alongside the existing facility at Chembarambakkam, Chennai. Therein, the 'Scope of Work' has been specified as "Supply, Installation, Testing and Commissioning of Industrial Works". Further, under clause (3) to 'Article 1. General Principles' of the General Conditions of Contract, we 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 a....
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....roperty. This apart, we find under the General Clauses Act, 1897, 'Immovable Property' has been defined under Section 3(26) as "Immovable Property shall include land, benefits arising out of land and things attached to the earth, or permanently fastened to anything attached to the earth." It could be seen that these installations are normally fastened to the wall or roof of the building which in turn is attached to earth. The fact that the clause in the contract itself, which specifies the permanent and immovable nature of the executed project, viz., "(3) The Contractor shall complete the Work and deliver the Permanent Work to the owner in accordance with the Contract,", proves the case in point. 7.13. 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 natur....
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....r waste clearance, etc are meant to perform a specific function. These items would likely fall under the term Apparatus. 7.16. As far as the phrase 'fixed to earth either by foundation or by structural support' goes, it clearly conveys the fact that the apparatus, equipment or machinery is to be either fixed to earth or supported through a structure. Whereas, the above said installation in the instant case gets assimilated into the building/infrastructure, thereby becoming a part of the immovable property. 7.17. 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 said installation as an apparatus, equipment or machinery, they should be used for making outward supply of goods or services or both. Since these installations in the instant case does perform a specific function as in the case of an apparatus, but they help in better functioning of the factory in general. We are of the opinion that FFS and PHE are not capable of being used directly for making outward....
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....such supply or service is for cash, deferred payment or other valuable consideration." 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/TNGST Act, 2017. 7.19. From the above, we infer the following aspects, in relation to the contract involved in the instant case, i.e., (a) That the Fire-fighting System and Public Health Equipment 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 installation of Firefighting System and Public Health Equipment for the factory, results in a Permanent Work' of immovable nature to be delivered to the owner. (d) That the said output cannot be considered as 'Plant and Machinery' as defined under the....
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....se of M/s. The Varachha Co-op Bank Ltd., have filed "the fire safety extinguishers once fitted, no longer remains movable, goods as it gets assimilated in a permanent structure i.e. administrative building of the appellant. As the supply and installation of fire safety extinguishers, as pointed out above, makes it an immovable property, it ceases to be plant and machinery. Hence, in view of the above, we find that the appellant is not entitled to ITC of GST paid on Fire Safety Extinguishers in view of the provisions of Section 17(5)(c) of CGST Act, 2017". Therefore, the Ruling quoted by the Applicant does not help their stand. 7.22. As per the records furnished by the Applicant, the Contract is for installing the fire-fighting systems and public health equipment permanently to the building. These items once fitted, no longer remains movable goods as it gets assimilated in a permanent structure. As the supply and installation of fire-fighting systems and public health equipment as pointed out above, makes it an immovable property, it ceases to be a plant and machinery. Hence, in view of the above discussions, we find that the Applicant is not entitled to ITC ....