Page 181 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : KONKAN LNG PRIVATE LIMITED 507
(i) ITC will be eligible because it is going to be used for rendering out-
ward supply of goods or services or both.
(ii) The AAR failed to consider that though breakwater is an immova-
ble property it can be considered as plant and machinery as all im-
movable structure are not disqualified from being covered in term
‘plant and machinery’.
(iii) The AAR has stated that to qualify for inclusion in the term ‘plant
and machinery’ it must be established that it is impossible for regas-
ification plant to function without the breakwater. However, there
is no such test provided for the explanation to Section 17 of the Act.
24. The section under consideration is Section 17(5)(d) of the CGST Act
reproduced as under :-
(d) goods or services or both received by a taxable person for con-
struction of an immovable property (other than plant or machinery) on his
own account including when such goods or services or both are used in the
course or furtherance of business.
Explanation. - For the purposes of clauses (c) and (d), the expression
“construction” includes re-construction, renovation, additions or alterations
or repairs, to the extent of capitalisation, to the said immovable property;
Explanation :- For the purposes of this Chapter and Chapter VI, the ex-
pression ‘plant and machinery’ means apparatus, equipment and machin-
ery fixed to the earth by foundation or structural support that are used for
making outward supply of goods and services or both and includes such
foundation and structural support but excludes :-
(i) Land, building or any other civil structures
(ii) Telecommunication towers; and
(iii) Pipelines laid outside the factory premises.
A reading of the above section shows that plant and machinery though immova-
ble are eligible for ITC. The meaning of ‘plant and machinery’ is given in the ex-
planation. Thus, in order to come in the explanation to Section 17(5)(d) of the
Act, the inputs must be used for making (a) plant and machinery which should
be apparatus, equipment and machinery; (b) it should be used for outward sup-
ply of goods or services; (c) it should be neither of the following :-
(1) Land, building or any other civil structure;
(2) Telecommunication tower;
(3) Pipeline laid outside the factory premises.
It is seen from the facts presented by the appellant that he provides the services
of regasification of LNG to the Ratnagiri Gas and Power Pvt. Ltd. for which LNG
is supply to them by transportation in ship which are berth at the captive jetty.
LNG is transferred to appellant’s unit for regasification. The appellant is getting
the breakwater constructed to ensure safety of the ship that are berth at the jetty
and also to allow the ship to jetty at any point of time irrespective of the severity
of the waves and tides. At present ships are allowed only at certain time when
the intensity of waves is less than certain limit. After the construction of the
breakwater there will be no time restriction on ships entered the jetty.
25. Looking to the above issue, it is a basic question is as whether the
break water constructed for the appellant can be considered to be ‘plant and ma-
chinery’. The appellant has contended that though break water is an immovable
GST LAW TIMES  23rd April 2020  301