In re Konkan LNG Private Limited (GST AAR Maharashtra)
The applicant sought an advance ruling on whether input tax credit (ITC) is admissible on GST paid for works contract services used in constructing a breakwater wall at its LNG terminal, and whether the works contract falls under a specific entry of Notification No. 11/2017-Central Tax (Rate).
The breakwater project, constructed about 750 meters from the jetty and extending 2300 meters into the sea, comprises core rocks, armour layers, and accropodes. Its primary purpose is to absorb and dissipate wave energy during rough weather, ensuring protection of the jetty and enabling year-round LNG operations. The applicant contended that the breakwater is integral to its regasification plant, qualifies as “plant and machinery,” and therefore ITC should not be blocked under Section 17(5)(c) and (d) of the CGST Act. Reliance was placed on judicial precedents, including the Supreme Court’s decision in Safari Retreats, and on the functionality test to argue that the structure serves a direct business function.
The jurisdictional officer opposed the claim, asserting that the breakwater is an immovable civil structure, not “plant and machinery,” and thus ITC is barred under Section 17(5). It was further contended that works contract services for construction of immovable property are specifically blocked, and that subsequent legislative amendments clarified the intent to treat “plant or machinery” as “plant and machinery,” thereby limiting the scope for interpretation.
