Case Note & Summary
The petitioner, Konkan LNG Private Limited, a subsidiary of GAIL (India) Ltd., is engaged in the regassification of LNG at its plant in Dabhol. To enable all-weather berthing of LNG carriers, the petitioner undertook reconstruction of an incomplete breakwater adjacent to its jetty, spending approximately Rs. 600 crores. The petitioner sought an advance ruling under Section 97 of the CGST Act, 2017, on whether it was eligible to claim Input Tax Credit (ITC) on the construction of the breakwater. The Maharashtra Authority for Advance Ruling held that the breakwater is an immovable property and not 'plant or machinery' under Section 17(5)(d), thus ITC is blocked. The Appellate Authority affirmed this decision. The petitioner challenged the appellate order before the Bombay High Court. The court considered the definition of 'plant and machinery' in the Explanation to Section 17, which includes apparatus, equipment, and machinery fixed to earth by foundation and structural support used for making outward supply. The court found that the breakwater, consisting of rocks, boulders, and accropodes, is a civil structure designed to protect the jetty from waves, not an apparatus or machinery used directly in the supply of regassification services. The court held that the breakwater is an immovable property and does not fall within the exception for plant or machinery under Section 17(5)(d). Consequently, the ITC on its construction is not available. The petition was dismissed, upholding the orders of the authorities below.
Headnote
A) Goods and Services Tax - Input Tax Credit - Blocked Credit - Section 17(5)(d) CGST Act, 2017 - Breakwater as Immovable Property - The petitioner, engaged in regassification of LNG, constructed a breakwater to protect its jetty. The court held that the breakwater is an immovable property and not 'plant or machinery' as defined in the Explanation to Section 17. Therefore, input tax credit on goods and services used for its construction is blocked under Section 17(5)(d). The court upheld the orders of the Maharashtra Authority for Advance Ruling and the Appellate Authority. (Paras 10-13) B) Goods and Services Tax - Plant and Machinery - Definition - Explanation to Section 17 CGST Act, 2017 - The term 'plant and machinery' means apparatus, equipment, and machinery fixed to earth by foundation and structural support used for making outward supply. The breakwater, being a civil structure comprising rocks and accropodes, does not qualify as apparatus, equipment, or machinery. It is a protective structure, not used directly in the outward supply of services. (Paras 11-13)
Issue of Consideration
Whether the construction of a breakwater qualifies as 'plant or machinery' under Section 17(5)(d) of the CGST Act, 2017, entitling the petitioner to Input Tax Credit.
Final Decision
The Bombay High Court dismissed the petition, upholding the orders of the Maharashtra Authority for Advance Ruling and the Appellate Authority, denying Input Tax Credit on the construction of the breakwater.
Law Points
- Input Tax Credit
- Blocked Credit
- Plant and Machinery
- Immovable Property
- Breakwater
- Section 17(5)(d) CGST Act
- 2017
