ITC is eligible on input used for construction of foundation of machinery

The Rajasthan Authority for Advance Ruling (AAR) has ruled that Input Tax Credit (ITC) is eligible for GST paid on inward supplies used for constructing the foundation and structural support of plant and machinery. This applies when the machinery is fixed to the earth and used for making outward taxable supplies of goods or services. The ruling clarifies that such foundations and structural supports are considered part of the 'plant and machinery' itself.

The AAR, Rajasthan, in M/s. Uvee Glass Private Limited [Advance Ruling No: RAJ/AAR/2023-24/05 dated June 30, 2023] held that, Input Tax Credit ("ITC") of GST paid on the inward supply for fixing of plant and machinery to earth by foundation or structural support which is used for making outward supply of taxable goods is allowed.

Facts

M/s. Uvee Glass Private Limited ("the Applicant") is registered under the GST law and going to start process to make the different types of glasses. 

The Applicant intends to set up a plant and machinery for manufacturing glasses and for such manufacturing activity structural support is must otherwise machine will not run.

The Applicant sought advance ruling on the question whether ITC is eligible on the GST paid on the inward supply of structural support of the plant and machinery that is used for making outward supply of the goods/services.

The Applicant submitted that ITC should be eligible on the GST paid on the inward supply of structural support of the plant and machinery that is used for making outward supply of the goods/services as the same is admissible in accordance with the section 16(1) read with explanation to section 17(5)(d) of the Central Goods and Service Tax Act, 2017 ("the CGST Act").

Issue

Whether ITC is eligible on the GST paid on the inward supply of structural support of the plant and machinery that is used for making outward supply of the goods/services?

Held

The AAR, Rajasthan, in Advance Ruling No: RAJ/AAR/2023-24/05 held as under:

• Observed that, the eligibility and conditions for taking ITC under GST has been mentioned in Section 16 and 17 of the CGST Act.
• Noted that, ITC is available in respect of goods and services or both received by a taxable person for construction of "Plant and machinery" on his own account including when such goods and services or both used in the course of furtherance of business.
• Further noted that, the expression "Plant and machinery" has been defined under explanation which means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural support.
• Held that, ITC of GST paid on the inward supply of structural support of plant and machinery which is used for making outward supply of goods/ services is eligible to the extent of provisions/ conditions laid down in Section 16 and 17 of the CGST Act.