jetties are not covered within the expression ‘plant and machinery’ & ITC on such jetties is not available.


Quick Summary
The Gujarat Authority for Advance Ruling has determined that jetties, even those built to support LNG regasification equipment, are not classified as 'plant and machinery' under GST law. Consequently, input tax credit (ITC) on the tax paid for these jetties is not admissible. This ruling clarifies the tax treatment for infrastructure projects involving specialized port facilities.

Court :
Gujrat AAR

Brief :
The applicant M/s. Swan LNG Pvt. Ltd., has submitted that they are a private limited company incorporated in India and a subsidiary of Swan Energy Limited. They have submitted that they have entered into a Concession Agreement dated 18th October, 2017 with the Gujarat Maritime Board (‘GMB’) to, inter-alia, implement the development, construction, operation and maintenance of Liquefied Natural Gas (‘LNG’) Port with a Floating Storage and Regasification Unit (‘FSRU’) facility in Jafrabad, Gujarat under the Build, own, Operate and transfer (‘BOOT’) basis. As part of developing the LNG Port and FSRU facility, the applicant would be developing an Import Terminal for FSRU near the village Bhankodar near Jafrabad, Gujarat for an output of 10 MMTPA. After development of the said Import Terminal, it would be providing LNG regasification services to prospective customers.

Citation :
ADVANCE RULING NO. GUJ/GAAR/R/46/2020

GUJARAT AUTHORITY FOR ADVANCE RULING,
GOODS AND SERVICES TAX,
A/5, RAJYA KAR BHAVAN, ASHRAM ROAD,
AHMEDABAD – 380 009.

ADVANCE RULING NO. GUJ/GAAR/R/46/2020
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2019/AR/38)
Date: 30.07.2020

Name and address of the applicant : M/s. Swan LNG Pvt. Ltd.,
Flat No.301, Ground floor, 9th Avenue, Behind Rajpath Club, S.G.Highway road, Ahmedabad-380054.

GSTIN of the applicant : 24AASCS9155R1Z7
Date of application : 14.06.2019.
Clause(s) of Section 97(2) of CGST / GGST Act, 2017, under which the question(s) raised. : (d) Admissibility of input tax credit of tax paid or deemed to have been paid.
Date of Personal Hearing : 09.07.2020( Through Video Conferencing)

Present for the applicant :Shri. Nirali Gada, Shri Komal Sampat

B R I E F FA C T S

The applicant M/s. Swan LNG Pvt. Ltd., has submitted that they are a private limited company incorporated in India and a subsidiary of Swan Energy Limited. They have submitted that they have entered into a Concession Agreement dated 18th October, 2017 with the Gujarat Maritime Board (‘GMB’) to, inter-alia, implement the development, construction, operation and maintenance of Liquefied Natural Gas (‘LNG’) Port with a Floating Storage and Regasification Unit (‘FSRU’) facility in Jafrabad, Gujarat under the Build, own, Operate and transfer (‘BOOT’) basis. As part of developing the LNG Port and FSRU facility, the applicant would be developing an Import Terminal for FSRU near the village Bhankodar near Jafrabad, Gujarat for an output of 10 MMTPA. After development of the said Import Terminal, it would be providing LNG regasification services to prospective customers.

2. The applicant has submitted that as per the Concession Agreement, the applicant is required to develop the LNG infrastructure for the purpose of regasification of LNG, and FSRU, which would be installed in Harbor Area of the Port facility; that presently, as on the date of filing of this Application, the Port infrastructure and the FSRU is under development stage and has not yet been commissioned/operationalized and is expected that this facility would be commissioned/operationalized by mid 2020; that the proposed LNG Port Infrastructure consists of building two Jetties (referred to as ‘Jetty 1’ & ‘Jetty 2’), as per the development plan and these LNG Jetties which are proposed to be developed are completely unique in terms of their purpose and use as compared to the purpose and use of ‘Jetty’ as understood in a commercial parlance and shipping industry parlance; that these Jetties are essentially and primarily proposed to be used as foundation for the plant and machinery, that is, loading and unloading equipment and other related equipment which will be used for the purpose of loading, unloading, and transporting LNG; that the LNG Jetties proposed to be built as foundation of plant and machinery shall consist of the following:

To know more in details find the attachment file
 

FAQ :

No, according to the Gujarat Authority for Advance Ruling, jetties are not covered under the expression 'plant and machinery' for GST purposes.

No, input tax credit (ITC) on tax paid or deemed to have been paid for jetties is not available.

M/s. Swan LNG Pvt. Ltd. sought a ruling on whether jetties developed for an LNG Port and FSRU facility would be considered 'plant and machinery' and if ITC would be admissible. The ruling denied both.

The ruling clarifies that while jetties serve as a foundation for plant and machinery, they themselves are not the machinery or plant used for the core business operations of regasification.

 
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