Input Tax Credit (ITC) cannot be claimed GST paid for goods, services, or operation and maintenance services of cross-country pipelines outside manufacturing premises, according to a recent decision by the Chhattisgarh Authority of Advance Ruling.
M/s National Mineral Development Corporation (NMDC) Ltd. requested an advance ruling on the admissibility of input tax credits of GST paid on goods and services utilized for laying of cross-country pipeline close to a river until the boundary wall of the facto and admissibility of input tax credits on Operation and Maintenance Services (O & M Services) acquired via the Applicant for the maintenance of the above facility under the provisions of the Chhattisgarh Goods & Services Tax Act, 2017.
According to the application, the prohibition only applies to long-distance cross-country pipelines. In their situation, the pipeline is placed less than 50 kilometres from the factory, which is a short distance.
Additionally, it was argued that there are no limitations on using input tax credits for pipeline yearly operation and maintenance because these services are available for input credits on all types of immovable property.
Sonal K. Mishra and Rajesh Kumar Singh, members of the Authority bench, noted that the pipelines installed outside the applicant’s industrial grounds are neither machinery nor plant and that they should be treated as immovable property. Therefore, there are no justifications for claiming an input tax credit for the taxes spent on yearly operations and maintenance of the mentioned pipeline installed outside of the plant premises.
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In light of this decision, M/s NMDC, the applicant, is ineligible for an input tax credit for the GST paid furnished on the goods and services utilized for installing cross-country pipes outside the premises of the petitioner.
Additionally, it was decided that the application is ineligible for an input tax credit for CST paid on Operation and Maintenance (O&M) services provided for the maintenance of the aforementioned cross-country pipeline installed outside the applicant’s industrial premises.
