GST_CASE STUDY_SUPPLY_VALUATION_ITC.pdf

Let us understand the GST GSTIND GLOBAL SOLUTIONS LLP , RAIPUR
CA RAMANDEEP SINGH BHATIA
ASSORTED GST CASE
STUDIES ON
SUPPLY/
VALUATION/INPUT TAX
CREDIT

TAXABILITY OF OCEAN FRIEGHT – IMPORT –CIF BASIS- ULTRA VIRES
FACT & DISCUSSION OF THE CASE :
❑ BACKGROUND – Domestic shipping industries faces stiff
competition from international.
❑ GST Council recommends the levy through notification.
❑ Department contentions -
- They are empowered to specify the recipient taxable,
being inter state supply.
M/s Mohit Minerals Pvt. Ltd. Civil Appeal No. 1390 of 2022 (SC)
- It is a composite supply as per section 8 of the CGST ACT.
- Place of Supply is in India as per section 13(9) of the IGST ACT.

❑ Appellant contentions –
- Impugned notifications suffer from excessive delegation
- Imported goods procured on a CIF basis constitute is it an
extra-territorial tax?
- Importer not service recipient in CIF Contract
- By treating it is composite supply – will amount to double taxation

HELD THAT :
❑ The Government while exercising its rule-making power
under the provisions of the CGST Act and IGST Act is
bound by the recommendations of the GST Council.
However, that does not mean that all the
recommendations of the GST Council made by virtue of
the power Article 279A (4) are binding on the
legislature’s power to enact primary legislations;
❑ On a conjoint reading of Sections 2(11) and 13(9) of the IGST Act, read with Section
2(93) of the CGST Act, the import of goods by a CIF contract constitutes an “inter-
state” supply which can be subject to IGST where the importer of such goods would be
the recipient of shipping service;

HELD THAT :
❑ The specification of the recipient in this case the importer
– by Notification 10/2017 is only clarificatory. The
Government by notification did not specify a taxable
person different from the recipient prescribed in Section
5(3) of the IGST Act for the purposes of reverse charge;
❑ Section 5(4) of the IGST Act to specify a class of
registered persons as the recipients, thereby conferring
the power of creating a deeming fiction on the delegated
legislation;
❑ Indian importer is liable to pay IGST on the ‘composite supply’, comprising of supply of
goods and supply of services of transportation, insurance, etc. in a CIF contract, a
separate levy on the Indian importer for the ‘supply of services’ by the shipping line
would be in violation of Section 8 of the CGST Act.

MANDATORY DEDUCTION OF 1/3RD FOR VALUE OF LAND IS NOT SUSTAINABLE
FACT & DISCUSSION :
❑ When the tax is imposable under the charging section on the
supply of construction service to the recipient, the question is
whether for determining the quantum of such tax, a flat
deduction can be stipulated by delegated legislation?
❑ Arbitrariness of the deeming fiction by the impugned notification
MUNJAAL MANISHBHAI BHATT v/s UOI HC(GUJ) C/SCA/1350/2021
❑ Impugned notification providing for a deeming fiction is issued in exercise of powers under
Section 15(5) of the CGST Act.
❑ What if the supplier artificially inflates the price of land thereby deflating the value of
construction service?
❑ Already similar mechanism existed under service tax law which is not required to be deviated
from.

MANDATORY DEDUCTION OF 1/3RD FOR VALUE OF LAND IS NOT SUSTAINABLE
HELD :
❑ Mandatory fixed rate of deduction of 1/3rd of total
consideration towards the value of land is ultra-vires the
provisions as well as the scheme of the GST Acts. Application
of such mandatory uniform rate of deduction is
discriminatory, arbitrary and violative of Article 14 of the
Constitution of India.
MUNJAAL MANISHBHAI BHATT v/s UOI HC(GUJ) C/SCA/1350/2021
❑ While maintaining the mandatory deduction of 1/3rd for value of land is not
sustainable incases where the value of land is clearly ascertainable or where the
value of construction service can be derived with the aid of valuation rules, such
deduction can be permitted at the option of a taxable person particularly in cases
where the value of land or undivided share of land is not ascertainable.

NO INTEREST ON LATE FILLING OF GSTR-3B , IT IS ON LATE PAYMENT
FACT & DISCUSSION :
❑ Interest under section 50(1) of the Act can be demanded for
delay in filing monthly return in Form GSTR-3B or for the
delay in payment of the taxes.
❑ Whether liability of interest under section 50 of JGST Act,
2017 can be raised without initiating any adjudication process
under section 73/74 of the Act in the event Assessee raising
dispute towards the liability of interest.
Narsingh Ispat Ltd. V/s UOI [2022] 136 taxmann.com 403 (Jharkhand)
❑ Direct recovery under section 75(3) is permissible under the law and process of natural
justice?

SECTION 50. Interest on delayed payment of tax. — (1) Every person who is
liable to pay tax in accordance with the provisions of this Act or the rules made
there under, but fails to pay the tax or any part
SECTION 73(1) Where it appears to the proper officer that any tax has not been
paid or short paid or erroneously refunded, or where input tax credit has been
wrongly availed or utilized for any reason, other than the reason of
fraud…………………., requiring him to show cause as to why he should not pay the
amount specified in the notice along with interest payable thereon under
section 50 and a penalty leviable under the provisions of this Act or the rules
made thereunder.
Section 75(12) Notwithstanding anything contained in section 73 or section 74, where
any amount of self-assessed tax in accordance with a return furnished under section 39
remains unpaid, either wholly or partly, or any amount of interest payable on such tax
remains unpaid, the same shall be recovered under the provisions of section 79.

HELD :
❑ *Comments Only : - Interest under section 50(1) is not leviable on the
taxes paid. It cannot be demanded for any delay in filing monthly
return in Form GSTR-3B once the amount is deposited / credited in
Electronic Cash Ledger in accordance with Section 49. Interest under
section 50(1) being compensatory in nature, it can be demanded, if the
amount remains unpaid or the registered persons fails to pay the tax.
❑ If an Assessee disputes the liability of interest i.e. either disputes its calculation or even the
leviability of interest, then the only option left for the Assessing Officer is to initiate proceeding
either under Section 73 or 74 of the Act for adjudication of the liability of interest
❑ In that view of the matter, we are unable to accept the contention of learned counsel for CGST
that no show-cause notice was required to be given in this case. Even otherwise, if any penal
action is taken against the petitioner, irrespective of the fact whether there is provision under the
Act or not, the minimum requirement is that the principles of natural justice must be followed.

RENT FREE ACCOMMODATION PROVIDED BY PARTNER TO
PARTNERSHIP FIRM WITHOUT CONSIDERATION – TAXABLE SUPPLY
QUESTIONS BEFORE THE AUTHORITY:
❑ Whether GST liability arises in respect of rent-free use of
property of partner by partnership firm to carry out business.
❑ Notional rent is charged, Acceptable for GST purpose ?
❑ Is there any need for drafting rental deed between partners and
partnership firm – not in the course and furtherance of business
of partner.
ShanmugaDura [2022] 136 taxmann.com 167 (AAR - TAMILNADU)
❑ Applicable Rules of Valuation for Rent ?

RENT FREE ACCOMMODATION PROVIDED BY PARTNER TO
PARTNERSHIP FIRM WITHOUT CONSIDERATION – TAXABLE SUPPLY
HELD:
❑ Liable for GST under section 7(1) read with schedule –I.
❑ Press release citied of Selling of used Gold does not
acceptable, regular earning in renting and sale of gold is one
time activity.
ShanmugaDura [2022] 136 taxmann.com 167 (AAR - TAMILNADU)
❑ Applicant in the course or furtherance of business has rented out the properties for
commercial use to partnership firm which is a separate person and the same is taxable
supply even when rendered without consideration
❑ Applicant and firm being related persons, Rule 28 shall apply for valuation.

ITC OF CANTEEN SERVICES - BLOCKED
(1) Whether Input Tax Credit (ITC) available to Applicant on GST
charged by service provider on canteen facility provided to
employees working in factory?
(2) Whether GST is applicable on nominal amount recovered by
Applicants from employees for usage of canteen facility?
(3) If ITC is available as per question No. (1) above, whether it will
be restricted to the extent of cost borne by the Applicant
(employer)?
TATA MOTORS LTD. 2022 (59) G.S.T.L. 107 (A.A.R. - GST - Guj.)

LAW:
17(5) (b) the following supply of goods or services or both —
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic
surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause
(aa) except when used for the purposes specified therein, life insurance and health insurance :
Provided that the input tax credit in respect of such goods or services or both shall be available where an
inward supply of such goods or services or both is used by a registered person for making an outward
taxable supply of the same category of goods or services or both or as an element of a taxable composite
or mixed supply;
(ii) membership of a club, health and fitness centre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel concession :
Provided that the input tax credit in respect of such goods or services or both shall be available, where it is
obligatory for an employer to provide the same to its employees under any law for the time being in force.

HELD:
❑ We note that sub clause of Section 17(5)(b)(i) ends with colon : and
is followed by a proviso and this proviso ends with a semicolon.
❑ Colons (:) and semicolons (;) are two types of punctuation. Colons
are used in sentences to show that something is following, like a
quotation, example, or list. Semicolons are used to join two independent
clauses/ subclauses, or two complete thoughts that could stand alone as
complete sentences. That means they`re to be used when you`re dealing
with two complete thoughts that could stand alone as a sentence.
❑ We find that semicolon creates a wall for conveying mutual exclusivity between the sub-
clauses, in present matter. It is obvious that the legislature intended the said sub-clauses to
be distinct and separate alternatives, with distinctively different qualifying factors and
conditionalities

HELD:
❑ ITC on GST paid on canteen facility is blocked credit under Section
17(5)(b)(i) of CGST Act and inadmissible to applicant.
❑ GST, at the hands on the applicant, is not leviable on the amount
representing the employees portion of canteen charges, which is
collected by the applicant and paid to the Canteen service
provider.

ITC AVILABLE ON SALE PRMOTION GOODS OR SERVICED
❑ Distribution of goods and services to retailers as per
scheme is 'Supply' as defined under section 7 of GST
Act ?
❑ GST paid on goods/services procured for distribution of
sales promotion rewards to retailers for achieving sales
target is available as input tax credit ?
GRB Dairy Foods (P.) Ltd. [2021] 133 taxmann.com 11 (AAR - TAMILNADU)

DISCUSSION:
❑ Section 17(5)(h), goods disposed of by way of gift are not eligible for
ITC. The term 'gift ' is not defined in CGST Act, the meaning of the
term 'gift' as defined in the Gift Tax Act. Is as below:
❑ The promotional rewards were extended by the applicant at their own will voluntarily
without any consideration in money or money's worth on achievement of set target to
the retailers. The rewards are not in the nature of discounts to the products but are in
the nature of personal consumables and qualifies to be termed as gifts.
"(xii) "gift" means the transfer by one person to another of any existing movable or
immovable property made voluntarily and without consideration in money or money's
worth, ...."

Held :
❑ it is stated that the goods are distributed on fulfilment of the
conditions of the scheme, with no separate consideration,
therefore, the distribution of goods and services to the retailers as
per the Scheme is not a 'Supply' as defined under section 7 of the
GST Act.
❑ The GST paid on inputs/input services procured by the applicant to implement the
promotional scheme under the name 'Buy n Fly’ is not eligible for Input Tax Credit under
the GST law in terms of Section 17(5)(g) and (h) of the CGST Act, 2017 and TNGST
Act, 2017.

Further Discussion:
❑ Circular No. 92/11/2019-GST, dated 7-3-2019
Buy1 get 1 Scheme – ITC available – Noting is free
❑ Fact of the case – suggest contractual obligation
❑ Australian High court ruling in the matter of Federal commissioner Taxation v. McPhail
[1968] 117 CLR 111 wherein it has been held that to constitute a 'gift' it must appear that
property transferred was transferred voluntarily and not as a result of a contractual
obligation to transfer it and that no advantage of a material character was received by
the transferor by way of return.

LIQUATED DAMAGES - NOT AN- CONSIDERATION FOR TOLERATING AN ACT
❑ FACTS & DISCUSSION OF THE CASE
- Assessee was engaged in business of mining and selling of coal - In commercial
contracts entered during course of business certain clauses providing penalty for non-
compliance/breach of terms of contract had been stipulated
- Received certain amount from buyers of coal and vendors toward penalty, earnest
money deposit forfeiture and liquidated damages
- Adjudicating Authority did not accept contention of assessee and held that penalty,
earnest money deposit forfeiture and liquidated damages had been received by
assessee toward consideration for tolerating an act leviable to service tax under
section 66E(e)
South Eastern Coalfields Ltd. [2021] 124 taxmann.com 174 (New Delhi - CESTAT)

LIQUATED DAMAGES - NOT AN- CONSIDERATION FOR TOLERATING AN ACT
❑ HELD
▪ As such for invocation of the said clause, there has to be first a concurrence to assume
an obligation to refrain from an act or tolerate an act etc. which are clearly absent in
the present case.
▪ Whether since in instant case penal clauses in contract were in nature of providing a
safeguard to commercial interest of assessee,
▪ Section 74 of the contract Act, declares the law as to liability upon breach of contract
where compensation is by agreement of parties pre-determined.
▪ it was not possible to sustain view taken by Adjudicating Authority that penalty,
earnest money deposit forfeiture and liquidated damages had been received by
assessee towards consideration for tolerating an act leviable to service tax under
section 66E(e)
South Eastern Coalfields Ltd. [2021] 124 taxmann.com 174 (New Delhi - CESTAT)

ITC not to be reversed in relation to loss arising from manufacturing process
ARS Steels & Alloy International (P.) Ltd. [2021] 127 taxmann.com 787 (Madras)
❑ FACTS & DISCUSSION OF THE CASE
• The petitioners are engaged in the manufacture of MS Billets and Ingots.
MS scrap is an input in the manufacture of MS Billets and the latter, in turn,
constitutes an input for manufacture of TMT/CTD Bars.
• There is a loss of a small portion of the inputs, inherent to the
manufacturing process.
• The impugned orders seek to reverse a portion of the ITC claimed by the
petitioners, proportionate to the loss of the input, referring to the
provisions of Section 17(5)(h) of the GST Act.
• (9) No input tax credit shall be available to a registered dealer for tax paid
Omitted[or Payable] at the time of purchase of goods, if such
Inputs damaged in transit or destroyed at some intermediary stage of manufacture.

ITC not to be reversed in relation to loss arising from manufacturing process
ARS Steels & Alloy International (P.) Ltd. [2021] 127 taxmann.com 787 (Madras)
❑ HELD
The impugned assessment orders reject a portion of ITC
claimed, invoking the provisions of clause (h) extracted above.
This relates to goods lost, stolen, destroyed, written off or
disposed by way of gift or free samples.
In my considered view, the loss that is occasioned by the
process of manufacture cannot be equated to any of the
instances set out in clause (h) above.
The situations as set out above in clause (h) indicate loss of inputs that are quantifiable,
and involve external factors or compulsions. A loss that is occasioned by consumption
in the process of manufacture is one which is inherent to the process of manufacture
itself.

SALE OF DEVELOPED PLOT DOES NOT CONSTITUTE A SUPPLY
❑ Applicant develops land by way of carrying out
development activities or providing amenities
such as drainage line, water line, electricity line,
land levelling, and common facilities viz. road
and streetlight, etc. and sells the developed plot
of land to the customer/buyer for which
consideration is received before issuance of
completion certificate.
Bhopal Smart City Development Corpn. [2022] 136 taxmann.com 122 (AAR - MP)
❑ According to applicant, in case of sale of developed plot, no requirement of obtaining
completion certificate has been prescribed in the local laws.

❑ Entry No. 5 in Schedule III states as : Sale of land and, subject to clause (b) of paragraph
5 of Schedule II, sale of building
❑ It is pertinent to note that the moot question here is whether there is sale of anything
other than land, since the query states that the plot has been sold after carrying out
the development activities or providing amenities such as drainage line, water line,
electricity line, land levelling, and common facilities viz. road and street light, etc
❑ Supply which attracts GST is defined under section 7.
Section 7(1) contains an inclusive list of what constitutes
supply, while section 7(2) list out what does not
constitute supply. Further section 7(2) begins with a non
obstante clause. Thus overriding the provisions of
section 7(1). [Para 7.3.1]

❑ It has been stated in the question that the sale of the plot is after carrying out
the development activities or providing amenities such as Drainage line, water line,
electricity line, land levelling, and common facilities viz. road and street
light etc. This development work does not get transferred to the buyer of the plot of
land. The development work is a common amenity, which is to be enjoyed by people at
large who own the adjacent parcel of land as well as all such persons who have a right of
way. Thus, in this case, the subject matter of sale is the land only and not
the development work done.
❑ In CIT v. Motors & General Stores (P.) Ltd. [1967] 66
ITR 692 (SC) it was held that 'sale' is a transfer of
ownership in immovable properly for a money
consideration. Therefore, transfer of ownership is the
essence of sale.

The Tribunal had held that, Civic amenities work done by land developer, there is no
transfer of property in goods to the site purchasers either collectively or
individually."
❑ Hon'ble Karnataka Appellate Tribunal in the case
of Continental Builders & Developers v. State of
Karnataka 2009 (67) Kar. L. J 359 (Tri.) (FB) examined
the issue whether development of plots and sale, is works
contract or not under Karnataka Sales Tax Act, 1957.
❑ The development work done on the land is for the whole parcel of land and not for a
given plot, which is sold to the customers. The title in the common area and
amenities does not belong to the owners of the plot but rests with the Urban Local
Body as per the applicable laws.

❑ Collector of Central Excise v. Krishna Carbon Paper Co. 1988 taxmann.com 620 (SC). -
words used in taxing statutes in respect of items should be interpreted in the way in
which it is understood by people conversant - In the Trade Parlance developed land is
also known as land.
❑ The term "Land" has not been defined under the GST
Laws and therefore, in the absence of a definition in a
statute, the meaning of land has to be construed in its
popular sense.
❑ Held - Sale of land, per se, is out of purview of GST on account of it not being a supply
- Sale of developed plot of land does not constitute a supply within meaning of section
7.

FREE OF COST (FOC) SUPPLY OF FUEL BY RECEIVER TO BE INCLUDED OR NOT
Shree Jeet Transport, [2022] 137 taxmann.com 442 (AAAR-Chhattisgarh)
❑ MEMBER CGST HELD: - Fuel being a mandatory component in terms of GTA service
essentially involves supplier to bear the cost of fuel and the same cannot be isolated
based on contract - includable in terms of Section 15(2)(b)
QUESTION BEFORE AUTHORITY :
Whether the value of diesel provided on a free of cost
(FOC) basis by service recipient while chartering vehicles
would form part of the value
❑ MEMBER SGST HELD: - FOC supply made between unrelated parties under terms of
contract are not taxable supplies - Value of supply as per Section 15(2)(b) does not
include FOC diesel as the liability to pay for diesel as per contract is of the service
recipient - Value of diesel would not be included in the taxable value of supply of
service provider.

LAW :
Section 15(2) The value of supply shall include —
(a) any taxes, duties, cesses, fees and charges levied under any law for the
time being in force other than this Act, the State Goods and Services Tax
Act, the Union Territory Goods and Services Tax Act and the Goods and
Services Tax (Compensation to States) Act, if charged separately by the
supplier;
(b) any amount that the supplier is liable to pay in relation to such
supply, but which has been incurred by the recipient of the supply and not
included in the price actually paid or payable for the goods or services or
both;
(c) incidental expenses, including commission and packing, charged by the supplier to the
recipient of a supply and any amount charged for anything done by the supplier in respect of the
supply of goods or services or both at the time of, or before delivery of goods or supply of services;
(d) interest or late fee or penalty for delayed payment of any consideration for any supply; and

PAST JUDGMENTS :
Circular No. 47/21/2018-GST, dated 8-6-2018
1.2 It is further clarified that while calculating the value of the supply
made by the component manufacturer, the value of moulds and dies
provided by the OEM to the component manufacturer on FOC basis shall
not be added to the value of such supply because the cost of moulds/dies
was not to be incurred by the component manufacturer and thus, does
not merit inclusion in the value of supply in terms of section 15(2)(b) of the
Central Goods and Services Tax Act, 2017 (CGST Act for short).
❑ KARAMJEET SINGH & CO. LTD. V/s COMMISSIONER OF C. EX., RAIPUR 2013 (32) S.T.R. 740 (Tri. -
Del.) Value of diesel supplied free of cost by service recipient to assessee for providing taxable
service would not be a component of the gross value charged for service provided for
computation of tax under Section 67 ibid - Rule 5(1) of Service Tax (Determination of Value) Rules,
2006 - Section 67 of Finance Act, 1994 - Section 65(97a) and Section 65(105)(zzza) ibi

RENTING OF PROPERTY FOR HOSTEL – EXEMPTION –RESIDENTIAL DWELLING
FACT & FINDING OF CASE :
❑ The petitioner is co-owner of a residential property situated in Bengaluru.
The property is a residential property having 42 rooms. The petitioner along
with other co-owners have executed a lease deed in favour of the lessee
namely M/s. D Twelve Spaces Private Limited (hereinafter referred to as 'the
lessee') on 21-6-2019. The lessee has leased out the residential property as
Hostel for providing long term accommodation to students and working
professionals with the duration of stay ranging from 3 months to 12 months.
TagharVasudevaAmbrish [2022] 135 taxmann.com 287 (HC -Karnataka)
❑ The Central Government has issued notification No. 9/2017 - Integrated Tax (Rate) dated 28-6-2017
and has granted exemption from payment which includes renting services which are provided with
respect to residential dwelling for use as residence.
❑ The AAAR Karnataka inter alia held that property rented out by the petitioner is a hostel building
which is more akin to sociable accommodation not residential accommodation. It was further held
that benefit of exemption notification is available only if the residential dwelling is used as a
residence by the person who has taken the same on rent/lease

❑ Entry 13 : Services by way of renting of residential dwelling for use as
residence.
❑ CCE v. Fiap India (P.) Ltd. [2012] 25 taxmann.com 534/37 STT 147
(SC) and CCE v. Madhan Agro Industries (I) (P.) Ltd. [2018] 92 taxmann.com
196/67 GST 147 (SC). - ‘Residential dwelling' has not been defined anywhere
in the Act. Therefore, its normal trade parlance meaning has to be taken into
account.
❑ It is submitted that residential accommodation which is used for long term stay has to be construed
as residential dwelling.
❑ In the exemption notification, no condition has been laid down that tenant alone must occupy the
building and therefore, no additional condition can be read into the exemption notification.

❑ Supreme Court in Kishore Chandra Singh v. Babu Ganesh Prasad
Bhagat AIR 1954 SC 316 has held that expression residence only connotes
that a person eats, drinks and sleeps at that place and it is not necessary that he
should own it.
❑ It is permissible to refer to the dictionaries to find out the general sense in
which the word is understood in common parlance. Mohinder Singh v. State
of Haryana AIR 1989 SC 1367 and CCE v. Allied Air - Conditioning Corpn.
(Regd.) [2006] 7 SCC 735
❑ Constitution Bench of the Supreme Court in 'Dilip Kumar and Company (supra) , Para 66.1 Exemption
notification should be interpreted strictly; the burden of proving applicability would be on the assessee

❑ Residential dwelling in normal trade parlance means any residential
accommodation and is different from hotel, motel, inn, guest house etc.
which is meant for temporary stay as per service tax education guide
issued by CBIC and same is binding on department
❑ The order dated 31-8-2020 passed by the AAAR Karnataka is quashed
and it is held that the service provided by the petitioner i.e., leasing out
residential premises as hostel to students and working professionals is
covered under Entry 13 of Notification No. 9/2017 dated 28-9-2017
namely 'Services by way of renting of residential dwelling for use as
residence' issued under the Act.
❑ The petitioner is held entitled to benefit of exemption notification.

Let us understand the GST
CASE STUDY : AMUSEMENT PARK
1) Mr. J S Bhuler is planning to construct an amusement
park including a water Park with various other
facilities like restaurants, gaming zone, rides, etc. He
has some doubts regarding the admissibility of input
tax credit –
A) Is input tax credit available on the PVC water slide.
B) Is input tax credit available on the steel structure on
which the slides.
C) Input tax will be available or not on goods and
services used for area development and preparation
of land on which water slides are erected and rides
will be installed. Is input tax credit available on land
lease charges paid to the state.

CASE STUDY NO : AMUSEMENT PARK
government corporation? (Upfront charges and lease
rental payable at regular intervals).
D) Input tax credit on construction of swimming pool
including wave pool as water slides directly run into pools.
E) Input tax credit on the construction of various rides
which includes civil work, steel structure work and
machinery.
f) Can he avail the input tax credit on the construction of
building of restaurant and gaming, as he may rent the
premises to the independent operators?

❑ INDICATIVE POINTS FOR DISCUSSION
1) PVC Slides can be called as Plant or machinery , being apparatus , equipment, and
machinery ?
2) Steel structure on which the PVC slides will be installed be covered within the
definition of plant and machinery given in the explanation.
3) Can Land development charges will be treated as plant and machinery as slides and
rides will be installed on that only. Is it immovable property,
4) Upfront lease rental charges if capitalize in the books of accounts eligible for input
tax credit . Will there be any change if the accounting treatment is changed?

❑ INDICATIVE POINTS FOR DISCUSSION
5) Lease rental payable at regular interval charged to profit and loss will be eligible for
input tax credit considering the explanation.
6) Can swimming pool or wave pool be treated as plant or machinery. For the
purpose if we can divide the cost into civil work and machinery , on which portion ITC
will be allowed ? Can ITC eligibility be seen component wise.
7) Rides which also have civil work , steel structure be treated as plant and machinery
. Will he be eligible for ITC for cement , steel and other building material used for civil
work of the rides.
8) What is the meaning of “own use” as mentioned section 17(5)(d) CGST Act?

❑ Section 17(5)
(c) works contract services when supplied for construction of an immovable
property (other than plant and machinery) except where it is an input service for
further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of an
immovable property (other than plant or machinery) on his own account including
when such goods or services or both are used in the course or furtherance of
business.
Explanation. — For the purposes of clauses (c) and (d), the expression “construction”
includes re-construction, renovation, additions or alterations or repairs, to the extent
of capitalisation, to the said immovable property;

❑ Section 17(5)
Explanation. — For the purposes of this Chapter and Chapter VI, the expression
“plant and machinery” means apparatus, equipment, and machinery fixed to earth
by foundation or structural support that are used for making outward supply of
goods or services or both and includes such foundation and structural supports but
excludes —
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.

❑ Definition of apparatus , equipment and machinery ?
There is no definition of plant in the Act : but, in its ordinary sense, it includes whatever
apparatus is used by a businessman for carrying on his business, - not his stock-in-trade which he
buys or makes for sale; but all goods and chattels, fixed or movable, live or dead, which he keeps
for permanent employment in his business.”
Apparatus which is used for mechanical operations or processes or is employed in a mechanical
or industrial business. In order to qualify as plant the article must have some degree of durability.
Scientific Engineering House Pvt. Ltd. v. Commissioner of Income Tax, - 1986 (157) ITR 0086 SC
The Hon’ble Apex Court in the case of CIT v. Dr. B. Venkata Rao - MANU/SC/1284/1999 : (2000)
243 ITR 81(SC) has held that in the case of an ”Operation Theatre” in the hospital, it has been
held to be a part of a plant and not a part of a building.
“Equipment” : the necessary items for a particular purpose.

❑ Definition of apparatus , equipment and machinery ?
“Machines” and “Machinery” - The word ‘machinery’ when used in ordinary
language prima facie, means some mechanical contrivances, by the combined
movement and interdependent operation of their respective parts generate power, or
evoke, modify or apply direct natural forces with the object in each case of affecting
so definite and specific a result. [Cited from AIR 1922 P.C. 27]. [para 10]
❑ Triveni Engineering Industries Ltd. v. C.C.E 2000 (120) E.L.T. 273 (S.C.) has held that
lift/elevator would be construed as an integral part of the immovable property.
❑ Kone Elevators v. State of Tamil Nadu 2014 (304) E.L.T. 161 (S.C.)] has held that in
the case of installation of lift after the goods are assembled and installed with skill
and Labour at the site, it becomes a permanent fixture of the building.

Jayadev Oil Mill v. Additional CCE, Belgaum, a Division Bench of Karnataka High Court
in [STA No. 23 of 1994, dated 20-2-1996]
If the 'building ' is an apparatus or tool used by the Assesse for carrying on the business
or manufacturing activity, then it would be part of the 'plant'. If on the other hand, if a
building or a part of a building has no connection with the business or manufacturing
activity that is being carried on, then obviously such a building or portion of the building
will not be part of the plant.
Inland Revenue Commissioner v. Burly Curie & Co. Ltd., House of Lords 76 ITR 62,
A dry dock, since it fulfilled the function of a plant, must be held to be a plant. "In order
to decide whether a particular subject is an 'apparatus' it seems obvious that an enquiry
has to be made as to what operation it performs. The functional test is, therefore,
essential at any rate as a preliminary"'.

Disclaimer: The views and opinions expressed in this article are those of the compiler and do not necessarily reflect the official policy or position of any
agency/department of the government. The same should not be considered as legal advice in no case. All possible efforts are made to make the compilation error free
and incase if there is any left , we regret for the same and request to point out the same at our mail id.
Head Office:
GSTIND GLOBAL SOLUTIONS LLP ,
C-9 to 12, First Floor , Ekatma Parisar , Rajbandha Maiden , Raipur Chhattisgarh -492001
Contact : gstindglobal@gmail.com www.gstingglobal.com

GST_CASE STUDY_SUPPLY_VALUATION_ITC.pdf

Recommended

Recommended

More Related Content

Similar to GST_CASE STUDY_SUPPLY_VALUATION_ITC.pdf

Similar to GST_CASE STUDY_SUPPLY_VALUATION_ITC.pdf (20)

More from Ramandeep Bhatia

More from Ramandeep Bhatia (12)

Recently uploaded

Recently uploaded (20)

GST_CASE STUDY_SUPPLY_VALUATION_ITC.pdf