In re Coral Manufacturing Works India Private Limited (GST AAAR Tamilnadu)
The GST AAAR Tamilnadu has recently delivered a ruling on a significant topic concerning the Input Tax Credit (ITC) in relation to structural support erected for overhead cranes within an ‘Integrated Factory’ building. The appeal case presented by Coral Manufacturing Works India Private Limited sought to clarify whether the ITC benefit was applicable in this context, challenging the existing orders of the Advance Ruling Authority, Tamil Nadu.
The appellant’s prayer to set aside the order and allow the ITC benefit hinged on interpreting the provisions of Section 17 (5) (c) & (d) of the CGST Act, 2017. The Act holds an exception to the bar on ITC benefit in the case of plant and machinery, with the appellant arguing that the Integrated Factory Building functions as such. However, according to the CGST Act, plant and machinery are defined as apparatus, equipment, and machinery fixed to earth by foundational or structural support. While the overhead crane and related structural support fit this definition, the integrated factory building itself does not. Therefore, the appellant is eligible for an ITC proportional to the structural support erected for the overhead crane alone, but not for the construction of other civil structures like the building’s side walls and roof.
FULL TEXT OF THE ORDER OF GST AAAR TAMILNADU
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are in pari materia and have the same provisions in like mailer and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act. 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act, 2017.
1.1 The subject appeal has been filed under Section 100 (1) of the Tamilnadu Goods & Services Tax Act, 2017/Central Goods & Services Tax Act 2017 by M/s. Coral Manufacturing Works India Private Limited, (herein after referred as the Appellant), having their registered office al No. 150. Villarasampatti Naal Road, Nasiyanur Road, Villarasampatti, Erode, Tamil Nadu, 638 107. They are registered under GST with GSTIN 33AAICC4646F1ZT. The appeal is filed against the Order No. 12/ARA/2022 dated 31.03.2022 passed by the Tamil Nadu State Authority for Advance ruling on the application for advance ruling filed by the Appellant.
2. The Appellant has stated that they are in the process of completing the establishment of an Integrated Factory’ Building to manufacture and supply generators for wind operated electricity generators (WOEG). The Integrated factory building that was being constructed, was a special kind of two-in-one building in the sense that it was not merely a conventional roofed factory building to protect the men, machineries and materials from rain and shine, but was a plant and machinery in itself due to its incrementally strong and large foundation, large numbers of pillars, 10 metres highly placed gantry beams with support mountings across the length and breadth, rails over the floor and beams for facilitating the overhead cranes to handle, move and operate heavy parts of the Generators from one work-station to another and finally to load the generators on to the special trucks to carry the generators to the destination. These facilities built into the building make the entire building undoubtedly a plant and machinery to make the WOEG.
2.1 As huge amount of steel, cement, structures, pre-cast, reinforced concrete beams, poles etc. are used in the process to make the above Integrated Factory Building and as huge GST amount is paid on these items when converted in to Works contract service (WCS), the Appellants felt in a bonafide manner that they may be entitled to Input ‘fax benefit under Sec. 16 of the CGST Act, 2017.
3. The Appellant had sought Advance Ruling on the following questions:
Whether input tax credit of GST is admissible for supply of the following goods & services
(a) steel, cement and other consumables etc., to the extent of their actual usage in the execution of the works contract service when supplied for construction of immovable property, in the form of the factory which is an Integrated Factory building with Gantry Beam, which in turn used for mounting across the pre-cast concrete beams, poles and over which the crane would be operated;
(b) structures, Pre cast, reinforced concrete beams, poles etc. (purchased as it is) which are used as supports to mount and operate the crane over 10 metres from ground, as shown in the pictures attached; and
(c) Other capital goods, like rails which are fixed over the concrete amis for smooth travel of the over-head crane.
4 .The Advance Ruling Authority (ARA) pronounced the following rulings in Para 9 of the Order, as under:
1. Input Tax Credit of GST paid on Steel, cement and other consumables are not available for the appellant as per the findings at Para 8 of the ruling.
2. The eligibility to credit of GST paid on structures. Pre cast, reinforced concrete beams, poles etc. (purchased as it is) and other capital goods are not answered as the question is not substantiated with the factual documents.
5. Aggrieved with the above ruling, the Appellant has filed the present appeal. The grounds of appeal are as follows:
5.1 “The ruling conveyed in the Order No. 12/ARA/2022 dated 31.03.2022 [impugned] not sustainable in law and the appellants wish to make the grounds of appeal, especially against the findings in para 8.1 and 8.2.and against decision in para 9 of the impugned advance ruling. In addition, the appellants is making the following specific response to the findings in Paras 6.1 to 7.4 of the impugned advance ruling, as per the table given below:-
