Case Law Details
In re Coral Manufacturing Works India Private Limited (GST AAR Tamilnadu)
The applicant claims the Input Tax Credit of the GST paid on the Steel, cement and other consumables used in proportion to the additional reinforcements. From the submissions, it is seen that the applicant has procured composite supply of works contract of increased foundation and structural support laid from the Subground level and added to the walls of the building, to strengthen the load bearing capacity. The applicant claims that as the side walls/factory foundations are strengthened for the bearing of the load of ‘Plant and Machinery’, the same should be considered as foundation for ‘Plant and Machinery’ and the proportionate GST paid on Steel, Cement and other consumables used are to be eligible for credit as ‘Plant and machinery’. In the case at hand, the supply received by the applicant results in construction of a civil structure which is in the form of a factory. The factory is nothing but a building where people use machines to produce goods or services or both. The foundation and walls though are strengthened is again only a part of the factory, which is in the genre of ‘Civil Structure’. Any factory premises will be designed and constructed to support the ‘Plant and Machinery’ to be housed in it for the operation/ production of the goods for which such factory is intended. The entire construction of the ‘Integrated factory premises’ with the strengthening of the walls, increase in the volume/ size of plinth beam, etc are only part of Civil structures of the Factory housing the ‘Plant and Machinery’ and are not the foundation with which such ‘Plant and Machinery’ are fixed to earth. The same, at best is an added measure to bear the load of the ‘Plant and Machinery’ installed in the factory. Therefore, the additional foundation/beams are to be considered as ‘any other civil structure’, excluded from the explanation of ‘Plant and Machinery’. Further, it is seen that the works are procured as ‘composite supply of Works Contract’ in which the supplier raises invoices only for “Works’ executed at the milestones as has been agreed in the agreement and it has not been established that the applicant makes the individual supply of Steel, Cement and other consumables and the invoices are in their names, which is again a pre-condition for availment of credit.
To sum up, the applicant procures services of Works Contract’ of Construction of ‘Integrated Factory Premises’ designed to take the load of various ‘Plant and Machinery’ to be housed for operations. The incremental foundations made is not the ‘foundation with which the Plant and Machinery are fixed to earth’, which is held as eligible along with the ‘Plant and Machinery’ as per the Explanation under Section 17 of the GST Act. Also, the applicant has not established that they individually procures steel, cement and other consumables for the works executed by their suppliers, thus the invoices for such goods have not been established to be in the name of the applicant. Therefore, the credit of steel, cement and other consumables even in proportion to the incremental volume of the earth foundation, side walls, beams, etc are not available as credit to the applicant. No ruling is extended on the ‘Pre-cast, Reinforcements, supports’ said to have been purchased as it is by the applicant and ‘Other Capital goods’ as the required facts of procurement and documentary substantiation is not made before us.
Read AAAR Order: ITC Eligibility on Structural Support for Overhead Crane & Integrated Factory Building
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TAMILNADU
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