Page 185 - GSTL_23rd July 2020_Vol 38_Part 4

2020 ] IN RE : ORDNANCE FACTORY, BHANDARA 551
B” in relation to such inter-connected roads should be admissible on
the following grounds :-
(d) The road ranging from the main entrance gate from where
the factory estate begins up to the factory premises is used for
inward and outward transportation of raw materials & fin-
ished goods and is thus used in the course or furtherance of
business.
(e) The roads within the factory estate; that is the establishments
like residential quarters, hospital, guest houses, market area
and all other establishments as mentioned above are also
used for the purpose of business of Ordnance Factory Bhan-
dara since as argued above all such establishments are there
for the benefit of employees of the factory & thus such roads
are used in the course of business of Ordnance Factory Bhan-
dara.
(f) The cost of such services forms part of the cost of the final
products and thus forms part of the value of taxable supply.
96.3 On perusal of the above submissions made by the Appellant, it is
observed that the construction and maintenance of the roads in the factory estate
is mandatory for the Appellant to carry out their business operation. Without the
proper road, the transportation of inputs, capital goods, and the finished prod-
ucts of the Appellant will not be able to take place. Thus, as per Section 16(1) of
the CGST Act, 2017, the expenditures incurred on the construction and mainte-
nance of the road from the factory’s main gate to the factory premises where the
manufacturing activities take place is eligible for ITC, since the same is incurred
on the input services, which are used in the course or furtherance of business.
However, the construction and maintenance of the roads within the resi-
dential complex of the factory estate are in relation to the supply of the accom-
modation facility to the employees in the residential colony maintained by the
Appellant, which are an exempt supply as discussed above, therefore, ITC in re-
spect of such expenditures on the construction and maintenance of road inside
the residential colony will not be available to the Appellant in accordance with
the provision of Section 17(2) of the CGST Act, 2017.
(iv) Land that is currently not used for any purpose whatsoever :-
The specific transactions in respect of which ruling on entitlement of
input tax credit is required is specified in the enclosed “Annexure
C”. In general, services related to maintenance of such land are pro-
cured. Such land is located within the factory estate and consists of
mainly wild grass, trees & other vegetation. It is adjacent to the
roads that are used for commutation. Input Tax Credit related to
expenses mentioned in “Annexure C” in relation to such land
should be admissible on the following grounds :-
(e) It is necessary to cut wild grass & other vegetation that grows
in such area on regular basis in order to maintain the factory
estate area neat & clean and ensure that such vegetation does
not spill over to and obstruct the roads used for commutation
within the factory.
(f) Another reason is that such wild grass & other vegetation in-
creases the bacteria count in the environment, factory and fin-
GST LAW TIMES  23rd July 2020  185