ITC NOT ELIGIBLE ON CAPITAL GOODS PROCURED FOR BUILDING LNG JETTIES- (GST AAAR GUJARAT)

ITC NOT ELIGIBLE ON CAPITAL GOODS PROCURED FOR BUILDING LNG JETTIES

GUJARAT APPELLATE AUTHORITY FOR ADVANCE RULING GOODS AND SERVICES TAX

Case Name:- Swan LNG Pvt. Ltd (GST AAAR Gujarat)

Advance Ruling No. GUJ/GAAAR/APPEAL/2022/06

Date of Judgement/Order: 09/05/2022

Important Point of AAAR Order

• We find that allowing input tax credit on construction of foundation cannot be decided in isolation without deciding as to whether items to be fixed on it falls within the definition of plant and machinery and further the same would be used for making outward supply of goods or services or both. The appellant is not before us seeking ruling on allowing input tax credit on any plant and machinery including its foundation that will be used for making outward supply of goods or services or both. The appellant has sought that the entire LNG Jetties that is being constructed to be treated as foundation for plant machineries that will be installed on it and to allow the input tax credit on inputs, input services and capital goods to be used in the construction of said LNG Jetties. We find that LNG Jetties are nothing but civil structures and civil structures are excluded from the definition of foundation and structural supports. The foundation that is allowed in the definition of plant and machinery is that which fixes the plant and machinery to the earth making it immovable. If certain portion of LNG jetties is used for directly fixing plant and machineries then it will not make jetties foundation for plant and machineries but they are only in the nature of civil structures. The appellant has also not produced any evidence to substantiate their claim that LNG jetties which according to them are foundation of plant and machineries will be used for outward supply of goods or services or both. We have also examined the case laws relied upon by the appellant in their submissions and find that the facts of the case are not similar to the present case before us.
• In view of the above discussion, we find that the LNG Jetties being built by the appellant are not in the nature of ‘plant and machinery’ being foundation for equipment, apparatus, machinery for re-gasification to be installed thereon. Therefore input tax credit on inputs, input services and capital goods for the purpose of building these LNG Jetties are not admissible.
• In view of the foregoing, we reject the appeal filed by M/s. Swan LNG Pvt. Ltd., and confirm the Advance Ruling No. GUJ/GAAR/R/46/2020 dated 30.07.2020 by holding that (1) LNG Jetties being built by the appellant are not covered within the expression ‘plant and machinery’ as foundation to equipment, apparatus, machinery to be installed on it in terms of Section 17 of the CGST Act, 2017 and (2) the appellant cannot avail input tax credit of GST paid on inputs, input services and capital goods procured for the purpose of building the LNG Jetties in terms of Section 16 of the CGST Act, 2017