TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 283
X X X X Extracts X X X X
X X X X Extracts X X X X
....y or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the appellant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Order-in-Appeal No. AAAR/22/2021 (AR) dated 02.12.2021, upheld the ruling of the lower authority. 4.1 Under the grounds of appeal, the appellant had stated that for credit to be restricted in terms of Section 17(5)(d), the following conditions need to be cumulatively satisfied: (i) Goods/ services should be received for construction' of immovable property; and (ii) The immovable property should not qualify as 'plant and machinery' They have contended that the afore stated conditions are not fulfilled in the present facts and therefore the restriction in terms of Section 17(5)(d) of the CGST Act is not applicable in the present case. 4.2 The Appellant stated that the service provided by IPL to them, viz. agreeing to part with the leasehold rights on the land, is not used for any construction activity per se; that these services are not availed by them for creating / constructing any land, building or civil structure or any other immovable or movable property; that the Services received for construction of an immovable property encompasses only those services which are directly used for construction of the immovable property such as services of engineer/c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a construction activity, the construction does not result in any immovable property as the ASP is clearly a movable property. ASP which is being set-up will not be permanently embedded to earth inasmuch as it can be shifted to another site as per the requirements. The Technical drawings of the ASP duly corroborates that it is movable in nature. In view of this, ASP qualifies as a movable property and the restriction under Section 17(5)(d) of the CGST Act which is applicable only in case of construction of immovable property does not apply to the present facts. ASP proposed to be set-up by them qualifies as 'plant and machinery'. Accordingly, services availed for scatting-up of the 'plant and machinery' should fall outside the ambit of the exclusion under Section 17(5)(d) of the CGST Act. In terms of the explanation to Section 17 of the CGST Act, 'plant and machinery' has been specifically defined as any equipment, apparatus attached to cart by foundation or structural support used for supply of goods or services. Further, the expression 'plant and machinery' specifically excludes land, building & any other civil structures, telecom towers, pipelines etc. ASP is primarily set up to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....geable, on transfer of leasehold rights is rightly admissible to the Appellant as Input Tax Credit. Section 16(1) of CGST Act enables the registered person to take ITC on 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 (which legal position and factual position are not disputed in the subject order). The Impugned Order acknowledges the fact that the services are used for setting up of an ASP which will be used for generation of gases by the Appellant and hence is clearly in the course or furtherance of their business. Further, since the restriction related to ITC under Section 17(5) of the Act cannot be invoked in the facts of this case, the Impugned Order in question passed by the learned authority is not legally tenable. 4.7 After considering the grounds of appeal and other submissions made by the Appellant, the Appellate Authority had passed an Order upholding the Ruling of the Lower Authority that M/s. Inox Air Products Pvt Ltd is not entitled to avail and utilize ITC of GST charged by India Pistons Ltd. as the same is restricted under Section 17(5)(d) of the CGST/TNGST Act 2077, if s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ersonal hearing on 06.01.2026. 5.2 During the hearing, the Authorised Representatives furnished 'Additional Written Submissions' dated 06.01.2026, containing the Grounds of defence, Copy of the MoU and SIPCOT approval, copies of the application for advance ruling and application for appeal filed, the respective rulings pronounced, the Hon'ble Madras High Court's Order dated 08.04.2025, Copy of the CESTAT (Mumbai) Final Order dated 24.04.2025, and Photographs of the ASP (Air Separation Plant). They also furnished a 'Compilation' of the extracts of relevant legal provisions and copies of the case laws in support of their defence. 5.3 The AR explained in detail the various contentions of the Appellant, as in the 'Additional Written Submissions' filed by them. In fine, the Authorised Representatives contended that their defence is basically structured around three basic layers, viz., (i) Inward supply of Leasing of land is not used for "Construction" within the meaning of Section 17(5)(d), (ii) the ASP is inherently movable in nature and cannot be regarded as an immovable property, and (iii) Without prejudice to the above, even if the ASP is considered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., or that the construction does not lead to creation of immovable property, or that the construction in question qualifies as plant and machinery, etc. the embargo under Section 17(5)(d) ceases to operate, and ITC cannot be denied merely by reference to the situs of installation or the involvement of land. • A. INWARD SUPPLY OF LEASING OF LAND IS NOT USED FOR "CONSTRUCTION" WITHIN THE MEANING SECTION 17(5)(d) • The Appellant contends that the subject inward supply, namely GST paid on leasing / leasehold rights in land, is not used for "construction" of any immovable property, as contemplated under Section 17(5)(d) of the CGST Act. The expression "construction" in Section 17(5)(d) is a term of limitation, and not one of mere association or proximity. The provision is attracted only where the inward supply is directly and proximately used in the activity of construction, resulting into the coming into existence of an immovable property. In the present case, the lease of land constitutes an enabling inward supply, which merely provides the right to access and use a site for the purpose of installing and operating the ASP, and that the same does not result in,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....300 TPD and 41260 TPD unit, and after detailed factual, technical and legal analysis, held that such plants are movable property. The findings directly apply to the ASP under the present proceedings, which is structurally and functionally identical, thereby squarely covering the issue. Relevant paragraphs from the judgement are extracted below: " ... On careful scrutiny of the available photographs in the case records, we are of the considered view that various individual equipment of the plant are erected, installed and commissioned within the premises of ISPAT by way of fastening to the foundation by the help of nuts/bolts and through installation of the base concrete support, which can be dismantled at any time, without causing much damage to the original equipment. Since, those equipment were not permanently attached to the earth, the same in our view, seized to be considered as 'immovable property' and as such, cannot fall under the scope of the definition provided under 65(105)(zzzz) of the Act of 1994. 9.5 We find that an identical issue about immovability of the plant came up for consideration before the Hon'ble Supreme Court in the case of Solid & Correct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s only for operational stability, the installation is capable of dismantling and relocation without loss of identity, and there is no intention of permanent beneficial enjoyment of land, emphasising that mere fastening for vibration-free functioning is not determinative. These principles flow from and reaffirm the ratio in CCE, • Ahmedabad vs. Solid and Correct Engineering Works & Ors. [2010 (4) TMI 15 - Supreme Court], which has been expressly relied upon and applied by the Hon'ble CESTAT in the Inox Air Products Ltd, (Final Order dated 24.04.2025) while examining identical ASPs of the Appellant. Applying these settled tests, the ASP in the present case, being bolted to foundations only for stability and capable of dismantling and re-installation, retains the character of movable property. • The photographs of the ASP, enclosed at Exhibit-H to the additional submissions, further demonstrate that the ASP comprises discrete industrial machinery and equipment such as compressors, pumps, adsorption beds, skids, cryogenic storage tanks and MCC panels, each mounted on foundations solely for purposes of alignment, load-bearing and vibration-free operation. The i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e precise manner contemplated by the Explanation, i.e., through foundations and structural supports for alignment, load-bearing and vibration-free functioning. • The Hon'ble CESTAT, in the Appellants own case (supra), has conclusively found that such installations constitute machinery placed on foundations only for stability, and not for permanent beneficial enjoyment of land. These findings directly support the characterisation of the ASP as plant and machinery within the meaning of Section 17(5), even if treated as immovable. • Once it is established that the ASP qualifies as "plant and machinery": - the statutory exception in the proviso is Immediately triggered; - the embargo under Section 17(5)(d) stands displaced by operation of law; and - ITC on the inward supply (GST charged on transfer of leasehold rights) cannot be denied. • Accordingly, the Appellant contends that even on the assumption that the ASP is to be regarded as immovable, the statutory framework, read with the settled tests and the findings of the CESTAT in Appellant's own case (supra), compels the conclusion that the Appellant is entitled to ITC ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rohibitory. It only signifies that land cannot be treated as plant and machinery and it does not follow that the presence or involvement of land automatically attracts the ITC bar. The moment an asset is found to qualify as plant and machinery, the statutory bar under Section 17(5)(d) stands lifted, and no further embargo survives merely because the machinery is installed on land. • Land not constructed, hence the Explanation to Section 17 is not applicable - The Appellant further submits that the exclusion of "land" in the Explanation to Section 17(5) operates in a specific and limited statutory context. The exclusion presupposes a situation where land might otherwise have been sought to be characterised as "plant and machinery" by virtue of some construction or functional integration therewith (e.g. permanently engineered mining pits or quarries for extraction or waste-treatment or effluent management systems where lined land beds/ lagoons constitute the operating apparatus), but for such exclusion. In other words, the exclusion of land in the Explanation is intended to clarify that even where land is developed or constructed upon in a manner that could otherwise be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y consumed in the course or furtherance of business. The statutory exclusion of land presupposes a claim of ITC on land itself or on construction thereof, whereas the present claim arises from GST paid on leasing services used as a business input for installation and operation of plant and machinery. Accordingly, the Explanation has no role to play in disallowing ITC on the impugned input service. 5.5 In view of the foregoing, the Appellant prayed that this Hon'ble Appellate Authority may be pleased to: A. Hold that the ASP is movable in nature; B. In any event, hold that the ASU qualifies as plant and machinery under the Explanation to Section 17(5); C. Set aside the findings in the Impugned Order based on erroneous interpretation of Section 17(5); and D. Hold that ITC is admissible on the subject inward supplies transactions. DISCUSSION AND ANALYSIS 6.1 We have carefully considered all the material available on record, the applicable statutory provisions, the 'Grounds' and the relevant documents furnished under the additional submissions made by the appellant during the personal hearing held on 06.01.2026. 6.2 We take note of the fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act, ibid, as it involves the terms/phrases, 'Construction', 'Immovable Property', 'On his own account' Plant and Machinery', Land, building and civil structures' etc., which are crucial for discussion in the instant case. Section 17(5)(d) of the CGST Act, 2017, read as, "(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant and 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 capitalisation, to the said immovable property;" 6.6 It is to be noted here that 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), - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellant. In this regard, we find that para 2 of page 2 of the MOU for transfer of Leasehold Rights dated 20.11.2020, entered into between M/s. India Pistons Ltd., (IPL) and M/s. INOX Air Products Pvt. Ltd., (INOX), reads as below :- "2. INOX has approached IPL for transfer of the remainder period of leasehold rights in respect of part of the Whole Property admeasuring 5 acres comprising survey nos. 18 (pt), 19 (pt), 20 (pt) and 21 (pt) situated in plot no. 76 (pt) along with superstructures (hereinafter collectively referred to as the "Scheduled Property" and more fully described in Schedule B hereunder and delineated in Red Colour in the Sketch annexed herewith) for setting up of medical and industrial gases air separation unit by INOX." Likewise, the State Industries Promotion Corpn. of Tamil Nadu Ltd., (SIPCOT), in para 2 of its letter No. P-II/SICH/II/IPL/2012 dated 28.12.2020, has observed as below :- "We, therefore, hereby, accord approval for transfer of balance period of leasehold rights to Plot No.76 pt. (S) measuring 5.00 acres of land along with existing shed/super structures, out of 15.34 acres at SIPCOT Industrial Complex, Hosur Phase - II from M/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Appellant, and it admittedly stands capitalised along with ASP in their books of accounts. Thereby it becomes clear that the service received from IPL is for construction' of the manufacturing facility (ASP). This apart, irrespective of the fact whether the said manufacturing facility is movable or immovable, it is clear that the said construction is undertaken 'on own account' by the Appellant. 6.10 Moving on to the issue, as to whether the said property could be treated as an immovable property or not, we find that the term 'immovable property', has not been defined under the GST enactments. However, 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." Accordingly, 'immovable property' includes not just land, but benefits arising out of land and other things attached to the earth, and most importantly irrespective of the fact whether a particular thing is directly attached to earth, or permanently fastened to anything that is attached to earth like the walls....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eration, storage, etc., in their own premises of land that has been acquired on lease for a period of 72 years. Therefore, the intention of permanent beneficial enjoyment of land is very much present in the instant case of the Appellant. 6.12 At this juncture, we would like to make it clear that the 'movable nature' or 'movability' is not the only criteria which would enable an installation or a work to fall outside the ambit of 'immovable property'. Rather the 'object', 'intendment', 'marketability' of the said work or installation are also to be taken into account to determine the movable nature of the said work. In this regard, we find that under the very same case involving M/s. Bharti Airtel Ltd., the Hon'ble Supreme Court has discussed the said aspect in a detailed manner in para 11.8 of its Order dated 20.11.2024, as follows:- "11.8 In view of the above decisions, we are of the opinion that merely because certain articles are attached to the earth, it does not ipso facto render these immovable properties. If such attachment to earth is not intended to be permanent but for providing support to the goods concerned and make their functioning more effective, and if s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the event of considering the fact that certain equipment or machinery or apparatus of the overall Air Separation Plant are found to be detachable and movable, the object behind the installation of such machinery/apparatus along with the other facilities related to it, is clearly to assist and enable the Appellant in the manufacture and supply of medical and industrial gases, on a permanent basis. Further, it is evident that the overall Plant with all the infrastructure that has come up after acquisition of land, and the shed / super-structures that existed prior to acquisition, are not capable of being detached as such and moved. Therefore, we are of the opinion that these installations are basically meant for the permanent beneficial enjoyment of the land, and are to be considered as immovable. 6.14 Alternatively, it has been stated under the clause 'Object of annexation' as above, that if the attachment is merely to facilitate the use of the item itself, it is to be treated as movable, even if the attachment is to an immovable property. That is to say, only those items which are attached in order to facilitate the use of the said item itself, as in the case of an air-condi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ispat Industries Ltd., ('ISPAT' in short) for setting up a 1260 TPD Gas Plant and a 300 TPD Oxygen Plant to be set up at ISPAT's premises. The brief facts of the said case as brought out in para 1.3 of the said order is reproduced below for facilitation:- "1.3 Under the agreement dated 02.01.2004, certain equipment required for "1.3 Under the agreement dated 02.01.2004, certain equipment required for setting up of the plant facilities were provided by ISPAT (termed as 'ISPAT equipment' under the agreement). Those ISPAT equipment were provided free of cost to the appellants for setting up of the Gas Plant. The ownership of that equipment always remained with ISPAT and the appellants do not have any interest in the same. Apart from the ISPAT equipment, ISPAT also provides power and water. The site on which the plant is required to be set up is provided by ISPAT. The site consists of a plot of developed land. According to the agreement, the appellants have no interest in the land provided by ISPAT. The appellants only have a right of access to the site to carry out their obligations under the agreement. The rest of the equipment (other than the ISPAT equipment) were ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....poses; (b) vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (c) land used for educational, sports, circus, entertainment and parking purposes; and (d) building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities." 6.18 Accordingly, the Hon'ble CESTAT, Mumbai had held in para 11.1 of the said order as, " ----. In view of the fact that the said Explanation clause has considered only a 'building', 'land', 'facilities relating thereto', in our considered view, no other property can be included therein for consideration as 'immovable property'. And in para 11.2 as, " _____. Thus, the legislative intent is manifest that the scope of the main section for understanding the meaning of 'immovable property', should only be confined to those prescribed properties, which are itemized in the said explanation clause. In other words, any other property(ies) not conforming to the prescribed properties should fall outside the scope and purview of consideration as 'immovabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the Hon'ble Supreme Court's judgment dated 20.11.2024 in the case of M/s. Bharti Airtel Ltd., is of no avail to them, in view of the fact that the case becomes distinguishable as discussed in para 6.11 above. Quite interestingly, we find that the contents of aforesaid judgment goes against the contentions of the Appellant, as discussed in detail in paras 6.12 to 6.15 above. 6.21 Accordingly, once it is held that the service in relation to acquisition of land received by the Appellant is meant for construction of an immovable property on their own account, the only available alternative is to examine and determine whether the installed facility falls within the ambit of 'plant and machinery', as the same stands excluded from credit blockage as envisaged under the provisions of Section 17(5)(d) of the CGST Act, 2017. In this regard, we find that the expression "Plant and Machinery" has been specifically defined under the 'Explanation' to Section 17 of the Act, as follows:- "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 a....