In A.R. Appeal No.04/2022 -AAAR- AAAR (Tamil Nadu) grants ITC to M/s. Coral Manufacturing Works India Pvt. Ltd. for structural support of overhead crane in integrated factory building but exclude other civil structures
Members Mandalika Srinivas & Dheeraj Kumar [17-04-2023]

Read Order: In Re: M/s. Coral Manufacturing Works India Private Limited

Chahat Varma

New Delhi, July 21, 2023: The Tamil Nadu bench of the Appellate Authorities for Advance Ruling has allowed the appeal filed by M/s. Coral Manufacturing Works India Private Limited (appellant) and has modified the order of the Advance Ruling Authority (AAR). The ruling stated that the appellant would be eligible for Input Tax Credit (ITC) proportionate to the extent of structural support erected in relation to the overhead crane alone. However, they would not be eligible for ITC relating to the construction of other civil structures like side walls and the roof of the integrated factory building.

In the matter at hand, the appellant, engaged in manufacturing and supplying generators for wind-operated electricity generators, was in the process of establishing an integrated factory building. This building was unique as it served both as a conventional roofed factory building and as plant and machinery itself. The appellant believed that they were entitled to claim Input Tax benefit under Section 16 of the Central Goods and Services Tax Act (CGST Act), as significant amounts of steel, cement, structures, pre-cast reinforced concrete beams, and poles were used in the construction of the integrated factory building.

The AAR had previously ruled that the ITC of GST paid on steel, cement, and other consumables was not available for the appellant. Further, the eligibility for credit on structures, pre-cast reinforced concrete beams, poles, and other capital goods was not addressed as the question lacked supporting factual documents.

The bench of Mandalika Srinivas and Dheeraj Kumar observed that the CGST Act defines ‘plant and machinery’ as apparatus, equipment, and machinery fixed to the earth by foundation or structural support, which were used for making outward supplies of goods or services. It included such foundation and structural supports. Therefore, the structural support erected in relation to the overhead crane would fall within the extended definition of plant and machinery.

The bench further clarified that based on the available materials, the integrated factory building itself cannot be categorized as plant and machinery. However, the overhead crane and its proportionate structural support would be categorized as plant and machinery according to the explanation provided in Section 17 of the Tamil Nadu Goods and Services Tax Act. Such structural support did not fell under the category of blocked ITC. Hence, the appellant was eligible for ITC proportionate to the extent of the structural support erected in relation to the overhead crane alone, subject to fulfilling the conditions stipulated in Section 17(5)(c) and (d) of the CGST Act.