Goods & Services Used in Plant Foundation and Sheds Not Eligible for Input Tax Credit under GST Rules AAR Andhra
Advance Ruling Authority (AAR) of Andhra Pradesh in case of M/s Maruti Ispat & Energy Private Limited held that No Input tax credit (ITC) is allowed under GST when goods and services are used for making foundation or shed to protect plant & machinery.
In the instant case applicant are involved in manufacturing of steel and production of power. Applicant seeks ruling in respect of whether ITC is allowed on Input goods and services used in making foundation & machinery. And whether ITC is allowed on Input goods and services used in creating sheds to protect plant & machinery.
Observations of the authority:-
M/s Maruti lspat & Energy Private Limited, (here in after called as ‘applicant’), is a private limited company, and manufacturers of steel and generation of power. The applicant submitted that they had DRI (direct reduced iron)i.e spong iron unit and they involve in generation of power. They stated the nature of industry and product requires… buying of large plant and machinery for installation and protection of this plant & machinery, they required to lay foundations, and also to construct the sheds. They have drawn the attention of this authority, the section 17(5)(c) & sec 17(5)(d) of CGST Act,2017, and submitted there is no restriction to claim input, with respect to items related to plant & machinery. Further, they stated structural support and civil structure are covered as per the explanation to the said provisions. They submitted the digging process is done with regard to creation of foundation for specific installation of plant & machinery and is completely suitable only for the specific plant & machinery. They highlighted the word ‘support’ used in explanation not only means support from base, but also support from all the ways, creating sheds is to protect the plant & machinery. Further, they submitted the list of goods and services, which are to be used for their plant and machinery as input.
This authority requested the applicant, to submit the photographic evidences, in support of his claim. The same is received through mail by this authority.
Statutory Provisions:
17. (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; 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 capitalisation, to the said immovable property;
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.
On being perusal of photographic evidences and submissions made by the applicant. we are of the opinion that the argument of the applicant to treat civil structures as structural support for plant and machinery is not tenable. The civil structures under consideration is squarely falls **other civil structures which is excluded as per the explanation to the proviso as stated above. Hence, this authority is of the opinion the claim of the applicant is not justifiable. Accordingly, the ruling is as follows:-
1) Whether we are eligible to take GST input on Goods which are used for installation Foundation) of plant and machinery?
2) Whether we are eligible to take GST input services which are used for installation (Foundation) of plant and machinery?
3) Whether we are eligible to take GST input on goods which are used for protection ( by creating sheds )_for plant and machinery?
4) Whether we are eligible to take GST inputs on services which are used for protection ( by creating shed) for plant and machinery? ”
Ruling : As per the material on record and photographic evidences of the applicant, on which sought for clarification does not fall under the ambit of explanation to the proviso to the Section 17(5) of CGST I APGST Act,2017. Hence, the applicant is not entitled to claim the input tax credit on the goods and services.
Below is Complete Text of the Judgement
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