In re Hindustan Zinc Limited (GST AAR Rajasthan)
The applicant, engaged in mining and manufacturing of metals such as zinc, lead and silver, sought an advance ruling on whether input tax credit (ITC) is available on goods and services received for increasing the height of a tailing dam used for disposal and treatment of hazardous mining waste (tailings) under Sections 17(5)(c) and 17(5)(d) of the CGST Act, 2017.
The applicant submitted that tailings are generated during the beneficiation process and must be disposed of in compliance with environmental laws. The tailing dam is used to process slurry, separate water for reuse, and safely store dry tailings. The height of the dam is increased using materials such as rocks, mud, sand, cement and HDPE sheets. The applicant contended that the tailing dam is an integral part of the milling plant and qualifies as “plant and machinery” or “plant or machinery,” thereby falling within the exception to blocked credit under Sections 17(5)(c) and (d). It relied on the functional test and various judicial precedents, including the Supreme Court’s decision in Safari Retreats Pvt. Ltd., to argue that immovable property serving business functions can qualify as “plant.”
The jurisdictional officer opposed the claim, stating that the tailing dam is an immovable property and a civil structure constructed using tailings, earth and cement. It was contended that pipelines and drainage systems associated with the dam are not “plant and machinery,” and that the dam is constructed to comply with environmental obligations rather than to carry out core business activities.
