Case Law Details
In re Mother Earth Environ Tech Pvt. Ltd (GST AAAR Karnataka)
The Appellant has been very vehement in their submission that the land filling pit is not a civil structure in as much as they have not used any cement or steel in the construction of the land filling pit. The term ‘civil structure’ has also not been defined in the GST law. A general understanding of the term can be derived from the definition of ‘civil engineering’ given in com as: “The profession of designing and executing structural works that serve the general public, such as dams, bridges, aqueducts, canals, highways, power plants, sewerage systems and other infrastructure “. Further, a ‘structure’ in the context of civil engineering refers to anything that is constructed or built from different inter-related parts with a fixed location on the ground. Accordingly, a civil structure would be any man-made structure which is built by applying the science of civil engineering. The materials used for construction of structure is irrelevant. A civil structure can be built with cement and steel or by means of other materials depending on the purpose of the structure and its feasibility. In the case of a landfill, the purpose is to dispose of hazardous waste and manage the leachate in order to avoid serious damage to the environment. Hence, the landfill is constructed using geo synthetic materials which serve to protect the soil and groundwater. This however, will not disqualify a landfill from being a civil structure. We are therefore of the opinion that the lower Authority was right in construing that the land filling pit is a civil structure. The definition of ‘plant and machinery’ as given in the Second Explanation to Section 17 clearly excludes a civil structure from being considered as a plant. By virtue of this exclusion, we hold that the Appellants are not eligible for input tax credit on the goods and services used for construction of the land filling pit.
At this juncture we would like to traverse back to the Supreme Court decision in the case of Scientific Engineering House (P) Ltd cited supra. The Honorable Supreme Court in the said case relied upon certain foreign decisions while dealing with the explanation ‘Plant’ and gave it a wide meaning under the provisions of Income Tax law. It was held that, plant would include any article or object fixed or movable, live or dead, used by businessman for carrying on his business and it is not necessarily confined to an apparatus which is used for mechanical operations or processes or is employed in mechanical or industrial business. We would like to make it clear that there is no hesitation in concluding that the land filling pit is used by the Appellant for carrying out his business. At the same time, we are examining whether such land filling pit will be eligible for input tax credit. For this we find that goods and services received for construction of immovable property on own account has been specifically put under the blocked credit list under Section 17(5)(d) with the rider that it shall not apply to plant or machinery. Accordingly, in the second explanation given in Section 17, while providing the meaning of the term plant and machinery, it has been clearly stated that Buildings and Civil Structures shall not be covered under the term Plant. However, while so clarifying, it has been accepted and understood that plant and machinery many a times requires support structure and/or foundation for installation and cannot work otherwise. Thus, civil structures such as foundation and supporting structure for fastening of plant and machinery to earth has been included as part of plant and machinery. However, any other civil structure has clearly been excluded from the definition of ‘plant and machinery’. The land filling pit comes within the ambit of the exclusion and hence is not eligible for input tax credit.
FULL TEXT OF THE ORDER OF AUTHORITY FOR APPELLATE ADVANCE RULING, KARNATAKA
At the outset we would like to make it clear that the provisions of CGST, Act 2017 SGST, Act 2017 are in parimateriaand have the same provisions in like matter and differ ch other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
