Case Law Details
In re Mother Earth Environ Tech Pvt Ltd. (GST AAR Karnataka)
The applicant is into the business of Treatment, Storage and Disposal Facility (TSDF) of hazardous waste and has constructed a Land filling Pit for processing and Treatment, Storage and Disposal of Hazardous Waste. The applicant has capitalized the land filling Pit as Plant and Machinery and consider itself to be eligible to claim ITC on the material and services utilized for its construction.
The explanation given at the end of Section 17(5) of CGST Act, 2017 defines plant and machinery as 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 Land, building or any other civil structure. We find that land filling pit is a combination of earth work and other capital goods as given in the brief submitted by the applicant. It can’t solely or in itself be identified as apparatus, equipment and machinery fixed to earth by foundation. It is also not a structural support for anything. Therefore, we do not agree with the applicant’s view that the land filling pit falls under plant and machinery. However, the discussion would be incomplete without deciding the question of Civil Structure, i.e. whether the land filling pit is a civil structure or not.
Civil structure involves engineering work at both levels i.e above and below the ground. We find that the applicant has performed civil work to create the landfill pits below the ground and therefore it is a civil structure.
The applicant has further placed reliance on the judgment rendered by the Hon’ble High Court of Orissa in the case of “M/s. Safari Retreats Pvt. Ltd., and Another v. Chief Commissioner of Central Goods & Service Tax & Others”. It is seen that in the said case, the prayers are (a) eligibility to credit of input tax paid on goods/services used for construction which is rented for commercial purposes (b) to hold Section 17 (5)(d) as ultra vires. While the Hon’ble High Court has granted the prayer at (a) has not accepted the prayer at (b) stating that they are not inclined to hold the provision ultra vires. On a case to case basis, the Hon hie High Court has granted the credit. Inasmuch as the said section is found to be valid by the Honhle High Court, we do not find any reason to go beyond the Statutory Provisions. However, since the appeal against the High Court order supra is pending before the Honhle Supreme Court, we refrain from commenting on the eligibility of the ITC in the instant case.
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Land fills and STP plants are used to provide services. Morever, while construcing the above, a detailed design and should be in a scientific manner.
The AAR is purely revenue bias and should be challenged.
Venkatanarayana GM
Advocate