ITC on RCC Foundation for Lyophilized Injectables Plant Not Ruled Upon as Activity Already Completed: Rajasthan AAR

The applicant, M/s CPL Pharmaceuticals Private Limited, is engaged in manufacturing pharmaceutical products and proposed to set up a lyophilized injectable drugs plant at RIICO Industrial Area, Udaipur. It engaged a contractor to undertake extensive civil and structural works, including excavation, RCC foundations, steel structures, flooring, pipe racks and internal pipelines, which were specifically designed to support heavy plant and machinery such as lyophilizers, vial filling lines, autoclaves and related equipment.

The applicant contended that these works constituted foundation and structural support for “plant and machinery” as defined under the Explanation to Section 17 of the CGST Act, and therefore, input tax credit on such works contract services should be admissible. GST at 18% was paid on the contractor’s invoices, and proportionate ITC was availed during FY 2023–24. The application sought an advance ruling on ITC eligibility under Section 17(5)(c).

Main Issue: Whether input tax credit is admissible on works contract services used for construction of foundation and structural support for plant and machinery installed at the applicant’s factory, in terms of Section 17(5)(c) of the CGST Act, 2017.

AAR Held: The Authority for Advance Ruling declined to give a ruling on merits. It held that an advance ruling under Section 95 of the CGST Act can be issued only in relation to supplies being undertaken or proposed to be undertaken.

In the present case, the construction of foundations and structural supports had already been completed and invoices had been raised and accounted for prior to the filing of the application. The Authority ruled that it was constrained from answering the question and therefore did not extend any ruling on the admissibility of ITC.

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