In re INOX Air Products Pvt. Ltd. (GST AAAR Tamilnadu)
The final issue to be seen is that whether the entire manufacturing plant is to be construed as a ‘Plant and machinery’. As discussed in para supra, the Act do not define the terms ‘Plant’, ‘Machinery’, though the provision under Section 17(3) (d) says,-
‘goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery)’
The Explanation gives what is ‘Plant and Machinery’ and has a means, inclusive and exclusive limbs. The means limb mentions ‘apparatus, equipment, and machinery fixed to earth by foundation or structural support ; the inclusive limb covers foundations and structural supports; and the exclusion limb excludes ‘land, building or any other civil structure’. Thus the explanation when read with the main portion of the Section 17(5) (d), establishes that the intention of the restriction at S. 17(5).(d) of the Act, which is not to extend credit of goods or services received for construction other than for construction of ‘Plant’ or ‘machinery’. The intention stands crystalised by the explanation provided wherein the goods/services used for foundation or structural support is included but goods/services received for ‘Land, civil structures’ is excluded. In the case at hand the impugned services are received by the appellant ‘for construction’ of the manufacturing plant which is an immovable property and even if the said plant is considerable as ‘Plant and Machinery’, the restriction on the services received towards the leasehold of the ‘Land’ is restricted by Section 17(5)(d) of the Act read with the Explanation for ‘Construction’ and ‘Plant and Machinery’
To sum up, we find that ASP is installed and commissioned with foundation and structural support, embedded on the land, the leasehold rights of which is obtained by the appellant by receiving the service of agreeing to withdraw the lease hold rights held by IPL in their favour. Without the appellant having the leasehold rights. they cannot undertake ‘construction’ of the manufacturing Plant, ASP. Also, ASP is an immovable property and not mere ‘Plant’ or ‘machinery’ but can be termed as ‘Plant and Machinery’, the Explanation of which specifically excludes land. Thus, it is clear that intention of law maker is to restrict ITC on services related to land, received for construction. Thus, we hold that, the services received from IPL, the cost of which is capitalised along with ASP, is a service received ‘for construction’ of an immovable property, and therefore the taxes paid is restricted as per Section 17(5)(d) of the CGST/TNGST Act 2017 and we uphold the ruling of the Lower Authority.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU
1. In terms of Section 102 of the Central Goods & Services Tax Act 2017/Tamilnadu Goods & Services Tax Act 2017 (“the Act”, in Short), this Order may be amended by the Appellate authority so as to rectify any error apparent on the face of the record, if such error is noticed by the Appellate authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer or the applicant within a period of six months from the date of the Order. Provided that no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard.
2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only
(a) . On the applicant who had sought it in respect of any matter referred to in subsection (2) of Section 97 for advance ruling;
(b) . On the concerned officer or the jurisdictional officer in respect of the applicant.
3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed.
4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made.
