The Gujarat Authority for Advance Ruling (AAR) has ruled that no ITC is available on the structure/shed erected on the left side of the Sand mill and spray dryer and on the structure/shed/roof.
The applicant is engaged in the activity of manufacturing dyes. The applicant procures intermediate raw material in crude form which is chemically processed & through HAG machineries i.e., Hot Air Generation, Liquid raw material is being converted into powder form which is known as dyes i.e., finished product which is applied to textile products.
The applicant intends to set up the factory at one premise using both the plots & have started setting up of the new factory.
The manufacturing process flow chart is provided in application. For manufacturing Dyes, they require various plant and machinery [P&M], primarily Sand Mill and spray dyer and HAG machine.
These machines are required to be fixed on earth by foundation or various structural supports which are of MS steel/foundation structure.
The applicant in his application had fairly admitted that the ITC on works contract utilized in Administration building and Warehouse would be treated as blocked credit.
However, he is before us seeking a ruling on the eligibility of ITC on works contract services & material procured and utilized towards the foundation for setting up of the following machineries Sand mill and spray dryer, HAG plant, ETP as well as having tank farm and fire tank and DG set.
The applicant has filed this application seeking advance ruling on the below mentioned questions viz Whether the applicant can avail ITC on —
1. WCS taken for structure on which machineries are fixed to earth by foundation and services taken for setting up plant ie MS steel structure along with roof which has been created mainly to protect machineries being supported by the said foundation.
2. Steel [TMT bar] being procured by the applicant company and used while taking works contract services for making the said foundation to fix machineries to earth.
The applicant’s primary contention while contending that they were eligible for ITC was that –
Reproducing the relevant provisions, competing tariff entries, etc., the authority bench noted that, on examining the contention of the applicant, read with the certificate of the chartered engineer, a bare look at the photographs Provided by the applicant when seen in conjunction to what is mentioned in section 17 ibid. which deals with apportionment of credit and blocked credits, we find that the law is unambiguous as far as ITC’ is concerned in respect of the P&M.
It was noted that ITC is not available in respect of works contract services when supplied för construction of an immovable property.
Further, it was observed that ITC is not available goods, services or both received for construction of an immovable property even when used in the course or furtherance of business. However, the sub-clauses specifically exclude in both the cases, plant and machinery.
The second explanation which defines plant and Machinery [for the purposes of chapter V and VII to mean apparatus, equipment and machinery fixed to earth by foundation and structural support & explicitly includes such foundation and structural supports with exclusion of land, building & other civil structures, the authority bench further noted.
The Authority Bench of CGST Member Amit Kuamar Mishra and CGST Member Milind Kavarkar thus ruled that, “ITC on structure/shed, erected on the left side of the Sand mill and spray dryer and the ITC on the structure/shed [i.e. roof and its supports] is not eligible.”
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