Page 189 - GSTL_3rd September 2020_Vol 40_Part 1

2020 ] IN RE : P.K. MAHAPATRA 123
(iv) but excludes -
(a) land, building or any other civil structures;
(b) telecommunication towers; and
(c) pipelines laid outside the factory premises.
Accordingly, if a structure resulting from an expense satisfies above definition,
then it shall be construed as a Plant and Machinery.
9.6 The said project for laying of private railway siding consisting of
civil structures as discussed above and allied works of signaling, telecommunica-
tion, can in no way be related to the outward supply of goods. As per Section
2(83) of CGST Act, 2017 “outward supply” in relation to a taxable person, means sup-
ply of goods or services or both, whether by sale, transfer, barter, exchange, licence, rent-
al, lease or disposal or any other mode, made or agreed to be made by such person in the
course or furtherance of business. Not acceding, but if assuming for the sake of dis-
cussion that these are apparatus/equipment as contended by the Appellant then
too it is implausible and far-fetched to imagine that these items which are even-
tually used for signaling, telecommunication in a private railway siding, erection
of Building Steel Structures, sheds, Block cabin, allied works, Signaling & tele-
communication works, Construction of Railway Staff quarters, Station building
etc. are used for making any “outward supply”. To apply the term “used for” in
the definition for plant and machinery, there should be a nexus between the im-
pugned items on which ITC is being claimed and “outward supply”. In the pre-
sent case the project of laying a private railway siding consisting of a variety of
different structures which are installed after a lot of prior work which involves
Civil work, Civil engineering, Ground work, supply, Foundation work, Fabrica-
tion, Erection of Building Steel Structures, sheds, Block cabin, Railway allied
works, Signaling & telecommunication works, Construction of Railway Staff
quarters, Station building etc. will render such nexus tenuous.
10. In the sectoral FAQs issued by Central Board of Indirect Taxes &
Customs (CBIC), relating to eligibility of ITC on railway sidings, a question was
raised regarding eligibility or otherwise of ITC on the same. The clarification
sought pertained to Mining sector and it was to the effect that whether Railway
siding in mining industry, exclusively utilized for dispatch of taxable goods viz.
coal (i.e. directly used in the course or furtherance of business) will be treated as
Plant & Machinery and ITC under GST is eligible or is to be treated as civil struc-
ture and ITC will be denied. In this context, it has been clarified therein that ITC
will not be available as railway siding is not plant and machinery as defined in
Section 17 of CGST Act, 2017. This FAQ has also been referred to by the AAR in
the instant issue.
10.1 We also agree with the findings by the AAR that “the provisions
facilitating availment of Input Tax credit does not extend any blanket or uncon-
ditional permission for availment of credit on all items irrespective of its use,
place of use and its role in making outward supply of goods or services or both,
as appears to have been misconstrued by the Appellant. These railway siding
towers, allied works of signaling, telecommunication located outside the premis-
es of M/s. NMDC by their very nature appears to be nothing but independent
civil structures, having no relationship whatsoever with outward supply”.
10.2 The Appellant in their defense have cited reference to the case law
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