In re Kanishk Steel Industries Limited (GST AAR Tamilnadu)
Tamil Nadu Authority for Advance Ruling (AAR) recently ruled on the input tax credit (ITC) eligibility of Kanishk Steel Industries Limited regarding their solar power plant. The company, engaged in steel manufacturing, sought clarification on whether ITC could be availed on goods and services used for the design, installation, and maintenance of a 10.2 MW solar power plant. The plant was intended for captive consumption, with generated electricity transferred to TANGEDCO, which would provide credits against the company’s factory power consumption. However, the AAR ruled that ITC was not available since electricity is classified as an exempt supply under the GST law.
Kanishk Steel argued that the solar plant should be considered a capital asset under Section 2(19) of the CGST/TNGST Act, 2017, as its value was capitalized in the company’s books. They further contended that since the electricity produced was used for the manufacture of taxable goods, it should qualify for ITC. The company also cited Sections 16 and 17 of the Act to support their claim, stating that the solar plant did not constitute immovable property under Section 17(5). However, the AAR concluded that electricity supply is subject to a nil rate of tax, making it an exempt supply. Therefore, ITC on inputs, capital goods, and input services used exclusively for power generation was not permissible under Sections 17(2) and 17(3) of the CGST/TNGST Act.
