In re H-Energy Gateway Pvt. Ltd (GST AAR Maharashtra)
Maharashtra Authority for Advance Rulings (AAR) has ruled that H-Energy Gateway Pvt. Ltd. is not eligible to claim Input Tax Credit (ITC) on the goods and services used for constructing its “Tie-in pipeline.” In a significant interpretation, the authority held that the company’s Floating Storage and Regasification Unit (FSRU), a vessel, qualifies as “factory premises” under GST law, thereby excluding the connecting pipeline from the definition of eligible “plant and machinery.”
The case was remanded back to the AAR by the Bombay High Court. The central issue was whether H-Energy could avail ITC on the construction of the pipeline used to transport re-gasified LNG from its FSRU to the National Gas Grid.
Background and Legal Provisions
Under the GST framework, Section 17(5) of the CGST Act, 2017, blocks ITC on goods and services used for the construction of immovable property. However, it provides an exception for “plant and machinery.”
The applicant, H-Energy, argued that its pipeline, while being immovable property, qualified as “plant and machinery.” The crucial part of their argument rested on the definition of “plant and machinery” provided in the explanation to Section 17, which specifically excludes three items, including “pipelines laid outside the factory premises.”
