The Maharashtra Authority of Advance Ruling (AAR) has held that Input Tax Credit (ITC) is not available on goods and services consumed for the construction of a pipeline which was laid outside the factory premises.
The applicant, M/s Mumbai Aviation Fuel Farm Facility Pvt. Ltd is in the business of providing fuel infra services wherein the Automatic transmission Fluid (“ATF”) of oil a joint venture company is stored in a storage tank. The Applicant is setting up a Connector Pipeline for Fuel Hydrant System and the fuel is supplied to the Airlines.
The Applicant contended that the Connector Pipeline Laying and other associated works form an important part of the Fuel Hydrant System and without this activity, the fuelling to the airlines will not take place. It was stated that the Connector Pipelines should be considered as the ‘plant and machinery’ integral to the facility serving the aircraft fuelling needs.
It was evident that the provision as per section 17 (6) of the MGST Act, 2017 means apparatus, equipment and machinery fixed to the earth by foundation or structural support that are used for making the out word supply of goods or services or both.
It was submitted by the applicant that the connector pipeline is not a separate pipeline laid outside the premises terminating outside the premises but it is an extension of the pipeline outside the MAFFFL premises which is necessary to complete the delivery of the fuel.
The two-member bench of M. Rammohan Rao and T.R. Ramnani has ruled that pipelines laid outside factory premises are not covered within the term ‘plant and machinery’ as per Explanation to Section 17(5)(c) and 17(5)(d) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”), and therefore the inputs used for construction of such pipeline outside the factory are not eligible to Input Tax Credit (“ITC”).
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