The Karnataka Appellate Authority of Advance Ruling (AAAR) while upholding the ruling of AAR held that the ‘Landfill-pit is a civil-structure, not plant and machinery’, no Input Tax Credit (ITC) is available.
The Appellant, M/s Mother Earth Environ Tech Pvt. is engaged in the business of solid waste management. They provide services for treatment, storage and disposal of hazardous waste. They collect hazardous waste from various industries across Karnataka and dispose the same as per the guidelines of Central Pollution Control Board (CPCB) and Karnataka State Pollution Control Board (KSPCB). For processing and disposal of the solid waste, they have taken land on lease from the Government and constructed a land filling pit into which the solid waste is filled and closed and sealed for 30 years. The land fill pit has been capitalised in their books of accounts as an asset and they have claimed depreciation under Income Tax.
In order to obtain a ruling on the classification of the service provided by them, the Appellant approaches the Authority for Advance Ruling (AAR) seeking a ruling on the issue whether the land filling pit can be considered as ‘Plant and machinery’ and therefore eligible for input tax credit or; whether the landfilling pit is to be considered as ‘civil structure and therefore become ineligible for input tax credit.
The AAR ruled that landfilling pits used for treatment, storage, and disposal of hazardous waste cannot be called as plant and machinery even if capitalized as such owing to significant earthwork. It has been distinguished from apparatus or equipment as also structural support.
The coram of Ranjana Jha and Shikha C. while upholding the ruling of the lower authority observed that civil structures such as foundation and supporting structure for fastening of plant and machinery to earth has been included as part of plant and machinery. However, any other civil structure has clearly been excluded from the definition of plant and machinery’. The land filling pit comes within the ambit of the exclusion and hence is not eligible for input tax credit.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
