Case Title | Swan LNG Pvt Ltd |
Court | Gujarat AAAR |
Honorable Judges | Member Milind Torawane and Member Seema Arora |
Citation | 2022 (3) GSTPanacea 388 HC Gujarat GUJ/GAAAR/APPEAL/2022/06 |
Judgement Date | 09-May-2022 |
Council for Petitioner | Mr. Paresh Dave |
Council for Respondent | Not Applicable |
In favour of | Assessee |
Section | Section 17 of CGST Act, 2017 |
Authority for advance ruling,Gujarat bench of Milind Torawane and Seema Arora, has held that the ITC on the LNG, input services and capital goods for the construction of building the LNG Jetties are not admissible.
FACTS OF THE CASE
M/s. Swan LNG Pvt. Ltd, (“the Appellant”) has entered into a concession agreement with the Gujarat Maritime Board and the Government of Gujarat for the development, construction, operation and maintenance of the LNG Port with a Floating Storage and Regasification Unit (“FSRU”) facility near Jafrabad, Gujarat, on Build, Own, Operate and Transfer basis. As a part of developing the LNG Port and FSRU facility, the Appellant is developing an Import Terminal for FSRU near the village Bhankodar, near Jafrabad, Gujarat. After the development of the Import Terminal, the Appellant intends to provide the LNG regasification service to prospective customers.
This appeal has been filed by the Appellant challenging the ruling passed by the AAR, Gujarat vide Advance Ruling No. GUJ/GAAR/R/46/2020 dated July, 30, 2020 holding that, the LNG jetties proposed to be built by the Appellant are not covered within the expression of plant and machinery and the Appellant cannot avail the ITC of the Goods and Services Tax (“GST”) paid on input, input services as well as on capital goods procured for the construction of building the LNG jetties as per the Section 17 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
The Appellant contended that as per the Explanation to Section 17(5) of the CGST Act, any foundation built for installation of plant and machinery on it also gets covered under the expression plant and machinery and accordingly, the restriction on availing of the ITC should not be applicable to such foundation. Thus, the ITC of the LNG jetties, which are the foundation of the plant and machinery, should be available.
COURT HELD
The AAAR Gujarat in Advance Ruling (Appeal) No. GUJ/GAAAR/APPEAL/2022/06, held as under:
Noted that, allowing the ITC on the 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.
Observed that, that, the ITC on construction of foundation is allowed if the same is used for fixing on it the plant and machinery and further the said plant and machinery should be used for making outward supply of goods or services or both. The foundation or structural support needs to be exclusively for fixing the plant and machinery on it.
Stated that, the 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 a certain portion of the LNG jetties is used for directly fixing plant and machinery then it will not make jetties foundation for plant and machinery but, they are only in the nature of civil structures.
Upheld the ruling passed by the AAR.
Held that, the LNG Jetties being built by the Appellant are not in the nature of plant and machinery and therefore, the ITC on the LNG, input services and capital goods for the construction of building the LNG Jetties are not admissible.
ANALYSIS OF THE JUDGEMENT
By noticing the above order we analyse that ITC is not available on input, input services and capital goods on purchased for the construction of the LNG jetties.
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