2026-VIL-05-AAAR
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SGST AAAR

GST – Odisha AAAR - Admissibility of input tax credit on procurement of goods (pipes) and services (works contract) for construction/laying of underground cross-country pipeline used for transportation of natural gas - Appellant procured pipes and availed works contract services for construction/laying of underground cross-country pipeline as per authorization from Petroleum and Natural Gas Regulatory Board (PNGRB) – Vide the impugned ruling the AAR held that laying of cross-country pipelines meant for supply of natural gas does not fall under the definition of plant and machinery and hence ITC on such pipe lines are in-admissible - Whether ITC is admissible under Section 16 of the CGST Act, 2017 on procurement of pipes and works contract service for construction/laying of underground cross-country pipeline – HELD - The pipelines laid by the appellant are considered as immovable property and not 'plant and machinery' as per the explanation to Section 17(5) of the CGST Act. The Section 17(5)(c) and 17(5)(d) restrict the availment of ITC on goods and services used for construction of immovable property, other than plant and machinery – Since the statute specifically bars availment of ITC on works contract services when supplied for construction of immovable property and the cross-country pipeline being an immovable property, the appellant is not entitled to avail ITC on works contract services provided for construction of such pipeline for transportation of natural gas - Further, clause (d) of Section 17(5) bars entitlement to ITC in respect of goods or services used for construction of immovable property on own account - The cross-country pipeline being an immovable property, the appellant is not entitled to avail ITC on goods or services received for construction and laying of such pipeline for transportation of natural gas – The appeal is rejected - Whether cross-country pipeline is “Plant & Machinery” – HELD - The pipelines laid cross-country by the Appellant on the direction of PNGRB do not form part of “plant and machinery” as these are laid outside the factory premises meant for processing the LNG, RLNG or CNG and therefore fall under the restriction clause as prescribed under Section 17(5) (c) and (d) of CGST Act – The underground pipelines laid by the Appellant as per the requirement of the PNGRB, do not form part of plant and machinery as such pipelines laid outside factory premises are excluded from the definition of plant and machinery. The expression “pipelines outside the factory” signifies that the pipeline is to transport some product from the factory to the end user. In the instant case, the gasified natural gas is transported through the pipeline which is outside the factory. Hence, the said pipeline is a “pipeline outside the factory” for which the appellant cannot avail ITC by treating pipelines as “plant & machinery” - Whether cross-country pipeline is covered under “apparatus, equipment, machinery” – HELD - To call ‘pipeline’ an “apparatus, equipment or machinery” would be a distortion of the meaning when the appellant himself described it as a pipeline. While construing a word which occurs in a statute or a statutory instrument in the absence of any definition in that very document, it must be given the same meaning which it receives in ordinary parlance or understood in the sense in which people conversant with subject matter understand it. Thus, in common parlance, a pipeline cannot be treated as an apparatus, equipment or machinery. When a specific description is available, it is not justified to bring a pipeline within a meaning of “apparatus, equipment or machinery” by quoting convenient meanings just in order to avail ITC.
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