Hon’ble Bombay High Court ruled that the petitioner, a company involved in LNG regasification, couldn’t claim input tax credit (ITC) for constructing a breakwater wall. This wall shields LNG vessels from tides during unloading at the petitioner’s terminal.
The court based its decision on the dictionary definitions of “plant” and “machinery,” which refer to places where industrial activity occurs with input or equipment. Consequently, the breakwater wall wasn’t considered as plant and machinery.
With due respect, I respectfully beg to disagree with this ruling for the following reasons:
– The court narrowly interpreted “plant and machinery,” restricting it only to manufacturing purposes. It overlooked that the breakwater wall is crucial for the petitioner’s core activity of LNG regasification, which is a taxable service under GST.
– The court held that the breakwater wall wasn’t used for making outward supplies. In my view, the expression “used” should cover not only direct use but also indirect uses.
– A more liberal and purposive approach would have been appropriate while articulating “plant and machinery,” as seen in Supreme Court cases.
– For instance, the SC recognized even sanitary fittings in a hotel as plant and machinery, considering their essential role in the hotel industry.
Let’s see if Hon’ble SC’s most awaited ruling on 17(5) make any difference.
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Sir I think waterwall is civil structure which is excluded from plant and machinery specifically, otherwise everything is used for business purpose still there is section 17 in gst act for blocking input tax credit..