GST AAR: No Tax Credit on Goods Using for Pipeline Construction Outside Factory

The Maharashtra Authority of Advance Ruling (AAR), no Input Tax Credit (ITC) is available on goods and services used for the construction of the pipeline that has been laid outside the factory.

The two-member bench of M. Rammohan Rao and T.R. Ramnani sees that, under the explanation to Section 17 of the GST Act, “plant and machinery” does not consist of the pipeline laid outside the premises of the factory.

The petitioner, Mumbai Aviation Fuel Farm Facility Private Limited (MAFFPL), engaged in the business of furnishing fuel infrastructure services in which the ATF of the oil PSUs would be stored in the storage tanks.

With the support of the Fuel Hydrant System, fuel is provided to the airlines. The laying of connector pipelines and related works is an essential part of the fuel hydrant system.

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The petitioner wanted to make the trendy and efficient aviation fuel utility to provide the needs of airlines operating via CSIA. MAFFFL has launched the development of the integrated.

With the assistance of the Fuel Hydrant System, fuel would be supplied to the airlines. The connector pipeline laying and the concerned works would be an essential portion of the fuel hydrant system, the airline filing shall not happen without the same activity. The petitioner would set up the connector pipeline for the fuel hydrant system at CSIA, Mumbai.

The petitioner asks for an advance ruling on the problem, where the inputs would be lost in the construction of immovable property outside MAFFFL’s licensed premises that would be proposed to be for the provision of the taxable output services, the ITC was available for the taxpayer.

AAR sees that the petitioner would unable to provide how the same would be entitled to an input tax credit in the presence of the express legal bar for claiming the same input tax credit.

While from the input tax credit entitlement related to 90% of the pipeline outside their premises, there would be no additional problems engaged in the current matter.

The Authority stated that the GST Input tax credit is not available in which the inputs are consumed in the construction of immovable property outside MAFFFL’s licensed premises.