Case Details: Gail (India) Ltd., In re - [2026] 183 taxmann.com 708 (AAR-ODISHA)
Judiciary and Counsel Details
- P. R. Lakra & Ms Yamini Sarangi, Member
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S.C. Kamra, Adv., R.C. Patra, Dy. G.M. & R.K. Sahoo, Chief G.M. for the Petitioner.
Facts of the Case
The appellant company was engaged in transmission of natural gas through pipelines across the country and owned a network of cross-country pipelines. For expansion of its transmission network, the appellant procured pipes, fittings and works contract services for laying underground pipelines used for transportation of natural gas. Since substantial investment was involved, the appellant sought an advance ruling regarding admissibility of input tax credit (ITC) on goods and works contract services used for construction and laying of such pipelines. The Authority for Advance Ruling held that cross-country pipelines did not qualify as “plant and machinery” and therefore ITC was not admissible in view of Section 17(5)(d) of the CGST Act. Aggrieved by the ruling, the appellant preferred an appeal before the Appellate Authority for Advance Ruling.
AAR Held
The Appellate Authority held that cross-country natural gas pipelines constituted immovable property as they were embedded in earth for permanent use and formed part of long-term infrastructure. It was further observed that Section 17(5)(c) specifically blocks ITC on works contract services used for construction of immovable property, and Section 17(5)(d) also restricts ITC on goods or services used for construction of immovable property on own account, except where such property qualifies as plant and machinery. Since the definition of “plant and machinery” under the CGST Act expressly excludes pipelines laid outside factory premises, the pipelines laid by the appellant could not be treated as plant and machinery. Consequently, ITC on goods and works contract services used for construction and laying of such pipelines was not admissible. The appeal was therefore decided in favour of the Revenue.
List of Cases Reviewed
- M/s. Gail (India) Limited, In re Advance Ruling ORDER No. 6/ODISHA-AAR/2025-26 dated 23.07.2025 (para ), Affirmed
- Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd. [2024] 167 taxmann.com 73 (SC)/[2024] 90 GSTL 3 (SC)/[2024] 106 GST 250 (SC) (para 5.4), followed
- Western Concessions Private Limited, Inre [GST-AAR, Application No.94, dated 26.11.2018] (para 5.4), approved
- Bharti Airtel Ltd. v. CCE [2024] 168 taxmann.com 489 (SC) (para 5.5), Distinguished
List of Cases Referred to
- Union of India v. Delhi Cloth & General Mills Co. Ltd. 1997 taxmann.com 1003 (SC) (para 2.4)
- H-Energy Gateway (P.) Ltd., In re [2025] 175 taxmann.com 656 (AAR – MAHARASHTRA) (para 2.4)
- South Bihar Sugar Mills Ltd. v. Union of India 1968 taxmann.com 2 (SC) (para 2.4)
- Bharti Airtel Ltd. v. CCE [2024] 168 taxmann.com 489 (SC) (para 2.5)
- Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd. [2024] 167 taxmann.com 73 (SC)/[2024] 90 GSTL 3 (SC)/[2024] 106 GST 250 (SC) (para 3.0)
- Western Concessions Private Limited, Inre [GST-ARA, Application No. 94, dated 26.11.2018] (para 5.4).
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