ITC Can be Claimed on Construction of Foundations and Structural Supports for Plant and Machinery: AAR:

ITC Can be Claimed on Construction of Foundations and Structural Supports for Plant and Machinery: AAR The applicant, Cadila Pharmaceuticals Limited, manufactures and supplies Active Pharmaceutical Ingredients (APIs). The applicant company decided to install a Solvent Recovery Plant for recycling solvents and a Mobile Effluent Treatment Plant for the disposal of wastewater used in API production. The applicant paid GST on these construction services.

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The applicant company sought an advance ruling on the following questions: "Whether the Applicant is eligible to avail ITC on input services used for construction of foundation and structural support for plant and machinery installed within the factory of the Applicant, for recovery of solvents and treatment of wastewater used in the manufacturing of Active Pharmaceutical Ingredients, in terms of Section 17(5)(c) of the CGST Act, 2017?" The Gujarat authority for Advance Ruling (AAR) noted that Section 17(5)(c) restricts ITC on contract services used for the construction of immovable property. However, this restriction does not apply when contract service is used for constructing "plant and machinery".

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It was observed that "plant and machinery” includes foundation and structural support. Therefore, the applicant was eligible for the ITC claim. The authority ruled that the Input Tax Credit (ITC) can be claimed on input services used for the construction of foundations and support structures for machinery installed in the factory of the applicant, as well as for services used to recover solvents and treat wastewater in making Active Pharmaceutical Ingredients, according to Section 17(5)(c) of the CGST Act, 2017.