No ITC on Pipeline Outside Factory Premises | AAR

Case Details: H-Energy Gateway (P.) Ltd., In re - [2025] 175 taxmann.com 656 (AAR-MAHARASHTRA)

Judiciary and Counsel Details

• D.P. Gojamgunde & Ms Priya Jadhav, Member

Facts of the Case

The applicant, engaged in setting up a liquefied natural gas (LNG) re-gasification project at Jaigarh Port, sought a ruling on the admissibility of input tax credit (ITC) on goods and services used for constructing a Tie-in Pipeline meant to transport re-gasified LNG from its facility to the National Grid. The LNG terminal comprised a Floating Storage Regasification Unit (FSRU), being a ship with a 4 MMTPA re-gasification capacity, moored to a jetty along with associated facilities. The applicant contended that re-gasified LNG required induction into the cross-country pipeline or National Grid to be supplied to customers and, hence, constructed a pipeline for delivering high-pressure gas from the FSRU to the National Grid. The issue was whether ITC was admissible on goods and services used for constructing such a Tie-in Pipeline, and the matter was accordingly placed before the Authority for Advance Ruling (AAR), Maharashtra.

AAR Held

The AAR Maharashtra held that a ‘factory’ does not necessarily require a building and that the FSRU, where the process of re-gasification of LNG took place, qualified as a factory. The AAR further held that the Tie-in Pipeline, being laid from the FSRU to the National Grid, was outside the factory premises. It was observed that the expression ‘pipelines outside factory’ signified transportation of a product from the factory to the end user. Consequently, the AAR held that the applicant was not entitled to avail ITC on goods and services used for the construction of the Tie-in Pipeline, in terms of Section 17(5)(c) and (d) of the CGST Act. The ruling was given in favour of the revenue.

List of Cases Reviewed

• Reliance Gas Transportation Infrastructure Ltd. v. CST [2016] 71 taxmann.com 324/59 GST 178 (Mumbai – CESTAT)
• CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC) (para 5.6), distinguished

List of Cases Referred to

• Western Concessions (P.) Ltd., In re [2019] 106 taxmann.com 186/25 GSTL 603 (AAR – MAHARASHTRA) (para 1.19)
• Western Concessions (P.) Ltd., In re [2019] 111 taxmann.com 131/78 GST 379/31 GSTL 533 (AAAR-MAHARASHTRA) (para 1.20)
• Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd. [2025] 174 taxmann.com 894 (SC) (para 1.22)
• Msco. Pvt. Ltd v. Union of India AIR 1985 SC 76 (para 2.3.7)
• Sri Chaitanya Educational Committee v. C.C., C. E. & S.T. 2016 (41) S.T.R. 241 (Tri. – Bang.) (para 2.3.14)
• Sales Tax Commissioner v. Modi Sugar Mills AIR 1961 SC 1047 (para 2.3.17)
• A.V. Fernandez v. State of Kerala AIR 1957 SC 657 (para 2.3.18)
• Commissioner of Sales Tax v. Ravi Trading Company 2018 (9) G.S.T.L. 250 (Bom.) (para 2.3.21)
• Sardar Gurmej Singh v. Sardar Partap Singh Kairon AIR 1960 SC 122 (para 2.3.23)
• Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd. [2024] 167 taxmann.com 73/106 GST 250/90 GSTL 3 (SC) (para 2.4.2)
• Reliance Gas Transportation Infrastructure Ltd. v. CST [2016] 71 taxmann.com 324/59 GST 178 (Mumbai – CESTAT) (para 2.4.11)
• CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC) (para 2.4.12)
• CIT v. Victory Aqua Farm Ltd. [2015] 61 taxmann.com 166/234 Taxman 598/379 ITR 335 (SC) (para 2.4.13)
• CIT v. Karnataka Power Corpn. [2000] 112 Taxman 629/247 ITR 268 (SC) (para 2.4.14)
• Western Concessions (P.) Ltd. v. Union of India [2024] 168 taxmann.com 424 (Bombay) (para 4)
• Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd. [2025] 174 taxmann.com 894 (SC) (para 5.1)
• Reliance Gas Transportation Infrastructure Ltd. v. CST [2016] 71 taxmann.com 324/59 GST 178 (Mumbai – CESTAT) (para 5.6)
• CIT v. Taj Mahal Hotel [1971] 82 ITR 44 (SC) (para 5.6).