GST – AAR Maharashtra: ITC of goods and services used for construction of a pipeline laid outside the factory premises is not available in terms of Section 17(5) (c) and (d) of the CGST Act [Order attached]
Order date – 01 December 2022
- The Applicant, M/s. Mumbai Aviation Fuel Farm Private Limited (MAFFFL) is in the business of providing fuel infra service wherein the ATF of Oil PSUs is stored in the storage tank. The applicant is setting up Connector Pipeline for Fuel Hydrant System at CSIA, Mumbai. With the help of Fuel Hydrant System, the fuel is supplied to the airlines.
- The Connector Pipeline Laying and Associated work forms the important part of Fuel Hydrant System and without this activity; the fuelling to the airlines will not take place.
- For laying connector pipeline up to airside, the specific approval is obtained from MIAL, the total length of connector line to be constructed is approx. 4 km. It is further specifically admitted by the applicant that (out of total pipeline work), if one takes the Total length of Connector Pipeline, the 10% of the pipeline falls in the area licensed to MAFFFL and the rest of pipeline length falls in the area which is outside the project.
- Whether input tax credit is available to the assesse where inputs are consumed in the construction of an immovable property outside MAFFFL's licensed premises which are meant and intended to be for the provision of taxable output services?
- The AAR finds that as per the explanation to Section 17, Plant and Machinery does not include a pipeline laid outside the factory premises. As a consequence, the ITC of goods and services used for construction of a pipeline laid outside the factory premises is not available in terms of Section 17(S) (c) and 17(5) (d) of the GST Act.
- In the backdrop of facts relating to placing 90% of the pipeline beyond their licensed area, it cannot be construed that said pipeline outside the licensed premises is performing part of plant and machinery. The legal provisions are very much clearly worded and unambiguous.
- The applicant has failed to establish how it is entitled to ITC in the presence of the express legal bar to claim such ITC. Apart from the entitlement of ITC, in respect of said 90% of the pipeline outside their premises, there is no other issue involved in the present case.
- Hence the question is answered in negative.