Court Buzz, GST

Karnataka AAR considers Land filling Pit to be a civil structure not plant and machinery.

Case: Mother Earth Environ Tech Private Ltd.

Forum: Karnataka AAR


The Applicant is into the business of solid waste management.They collect hazardous wastes from various industries across Karnataka and dispose the same as per the guidelines of Central Pollution Control Board (CPCB) and Karnataka State Pollution Control Board (KSPCB). They obtained the land on lease from the Government and constructed land filling pit for processing and disposal of solid waste. The Applicant contended that the landfill pit is plant and machinery and they have capitalised the same in their books of accounts. Further, they have claimed depreciation under the income tax excluding the GST paid thereon.

The Applicant sought an advanced ruling on :
Whether the term “other civil structure” used in the definition of “Plant and Machinery” restricts the Land filling Pit from considering it as Plant & Machinery and thereby restricts ITC to be availed on it.

Key points

The AAR found that the Applicant has not given any reason as to why the land filling pit should not be called a civil structure. Hence, going by the brief submitted by the Applicant regarding construction of the landfilling pit. The AAR observed that a civil structure involves engineering work at both levels i.e above and below the ground. The Applicant has performed civil work to create the landfill pits below the ground and therefore it is a civil structure.

The Applicant placed reliance on the judgment rendered by the Hon’ble High Court of Orissa in the case of “M/ s. Safari Retreats Pvt. Ltd., and Another v. Chief Commissioner of Central Goods & Service Tax & Others”. The Hon’ble High Court granted the credit. As Section 17(5)(d) CGST Act was found to be valid in the said judgment by the Hon’ble High Court. However, since the appeal against the High Court order supra is pending before the Hon’ble Supreme Court, The Authority refrained from commenting on the eligibility of the ITC in the instant case.

Thus, the AAR held the Landfilling Pit not as a Plant and Machinery but a civil structure.

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