AAR Gujarat Allows ITC on Construction of Concrete Tower Supporting VCV Lines for EHV Cable Manufacturing  

In re Polycab India Limited (GST AAR Gujarat)

In re Polycab India Limited, the Gujarat Authority for Advance Ruling examined whether input tax credit (ITC) could be availed on inputs and input services used for construction of a concrete Vertical Continuous Vulcanization (VCV) tower meant to support and erect VCV manufacturing lines used in the manufacture of Extra High Voltage (EHV) cables.

The applicant, engaged in manufacturing EHV, MV and LV power cables and other related products, proposed setting up a new manufacturing plant at Waghodia, Vadodara, for producing EHV cables through the VCV process. The VCV process involved a vertically installed manufacturing line equipped with extrusion systems, vulcanization tubes, cooling systems, capstans, pulleys and other machinery spread across a 17-floor tower extending approximately 146 meters above ground and 17 meters below ground.

The applicant explained that the VCV process required a vertical arrangement to ensure uniform insulation thickness, minimize cable deformation and maintain concentricity during cable manufacturing. The tower was designed specifically to bear heavy machinery loads, dynamic operational loads, wind loads and seismic loads. The concrete RCC shear wall and foundation were intended to provide structural and foundational support to the VCV manufacturing line.

A construction contract for the VCV tower was awarded to Shapoorji Pallonji and Company Private Limited, with invoices issued under SAC 995413 for “General construction services of industrial buildings” attracting GST at 18%. The applicant contended that ITC on such construction services was admissible because the tower formed part of “plant and machinery” under the Explanation to Section 17 of the CGST Act, 2017.

The applicant argued that the VCV line qualified as “apparatus”, “equipment” and “machinery” used directly in manufacturing EHV cables. It further submitted that the concrete tower was not an independent civil structure or building but an essential structural support without which the VCV manufacturing line could not function. The applicant relied on judicial precedents, dictionary meanings, CBIC Circular No. 219/13/2024-GST relating to ducts and manholes in OFC networks, and earlier appellate rulings including the Gujarat AAAR decision in KEI Industries Ltd.

The Authority examined Section 17(5)(c) and 17(5)(d) of the CGST Act, which block ITC relating to works contract services and construction of immovable property, except in cases involving “plant and machinery”. It also considered the statutory explanation defining “plant and machinery” to include apparatus, equipment and machinery fixed to earth by foundation or structural support, along with such foundation and structural supports, while excluding land, buildings and other civil structures.

After reviewing the layout of the VCV tower, the machinery installed on each floor and the operational requirements of the manufacturing process, the Authority held that the concrete tower was an essential structural support for the VCV manufacturing line. It observed that the tower maintained structural integrity, stability, precision and efficiency necessary for manufacturing EHV cables. The Authority further noted that “foundation and structural support” were specifically included within the definition of “plant and machinery” under Section 17.

The Authority clarified that once the construction was held to relate to structural support and foundation of plant and machinery, the restrictions under Section 17(5)(c) and 17(5)(d) would not apply, even if the expenditure was incurred on the applicant’s own account. It also drew support from the CBIC circular clarifying admissibility of ITC on ducts and manholes used in OFC networks and from the Gujarat AAAR ruling in KEI Industries Ltd., which had allowed ITC on construction of a similar VCV tower.

Accordingly, the Gujarat Authority for Advance Ruling held that the applicant was eligible to avail ITC on inputs and input services used for construction of the concrete VCV tower supporting and erecting the VCV lines used for manufacture of EHV cables under Section 17(5)(c) and (d) of the CGST Act, 2017.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT

Brief facts:

M/s. Polycab India Limited, 335,336,337, 339,353, 354, 355, 67-69. 70/1,71, 75-77, 102, 103, 104/1-2, 105, 106, 116/2, Nurpura, Vadodara IIalol Road, Halol, Panchmahals, Gujarat — 389350 [for short — ‘ applicant’ ], is registered under GS’!’ and their GSTIN is 24AAACP6474E1ZJ.

2. The applicant is engaged in the manufacture and supply of Extra High Voltage (EHV), Medium Voltage (MV), Low Voltage (LV) power cables, Optical fibre cables and FMEG conductors, cable solutions, telecom solutions, specialty oils, lubricants etc. and is having GSTIN No.24AAACP6474E1ZJ. They have manufacturing facilities in Gujarat, Maharashtra, Karnataka, Uttarakhand, Tamil Nadu and Daman and Diu. The applicant is currently manufacturing EHV enables at the Halol Plant in Gujarat, wherein continuous catenary vulcanization (CCV) process is being used for insulation of such EITV cables.

3. The applicant is in the process of setting up of a new manufacturing plant in Waghodia, Vadodara for making EHV cables using the Vertical Continous Vulcanization (VCV) process for making EHV cables. The process of insulation of cable cores in CCV lines happens in horizontal heating tubes. In contrast, in VCV lines, the process of insulation of cable cores is done in vertical tubes. The manufacturing line is equipped with pulling capstans, extrusion crosshead and continuous vulcanization tubes (CV tubes) which arc laid vertically in the plant. The VCV process is an advanced manufacturing technique used to produce EFIV cables with superior reliability and performance. This method is defined by its triple-layer co-extrusion system, which applies three critical layers onto a conductor simultaneously in a meticulously controlled, clean environment and all 3 layers are extruded simultaneously in one step to prevent contamination and ensure perfect bonding.

• Layer 1: Conductor Shield (Inner Semi-Conducting Layer): This is the first layer applied directly to the conductor and it’s primary function is to normalize the electric field, mitigating stress points and ensuring a smooth, uniform field distribution around the conductor.
• Layer 2: XLPE Insulation: Following the conductor shield, this layer is the primary insulator, extruded from cross-linked polyethylene (XLPE). Chosen for its high dielectric strength and thermal resistance, XLPE provides the robust insulation necessary to withstand the immense electrical stresses inherent in EFIV applications.
• Layer 3: Insulation Shield (Outer Semi-Conducting Layer): The final layer is applied over the XLPE insulation. It ensures a uniform electric field across insulation and establishes a crucial, bonded interface between the XLPE and the metallic screen.

4. The vertical orientation of the CV tube is necessary as it ensures a straight, tensioned path with minimal mechanical stress on the conductor and the isolation layers. This straight path is crucial as it minimizes any deformation of the cable as it moves through the process, which in turn minimizes eccentricity-the off center placement of the conductor within the insulation. The uniform pull and concentricity guaranteed by gravity ensure that the insulation is applied with a consistent, uniform thickness all around the conductor, which is critical for the long-term electrical performance and reliability of the cable. The VCV manufacturing line is required to be supported by concrete structure in square form on all sides, has a height of 163 meters out of which approximately 146 meters is from the ground and 17 meters underground. The VCV tower comprises 17 floors with each floor having a height of between 6-12 meters. Height of each floor varies as per the requirements of the manufacturing line. It also consists of passenger lifts and material handling lifts installed therein, a staircase with emergency exit and fire hydrants on each floor. The VCV tower will be used exclusively for the purpose of manufacturing ELIV cables. The capstan floor level is at 131.5 meters from the ground floor, and the extrusion floor level is at a height of 124 meters from the ground floor. The pressure turn pulley is at the basement level of the VCV tower which is 17 meters underground.

5. The process inside the VCV tower undertaken and equipment on each floor is summarized below for reference:

6. The weight of the significantly heavy components to be placed on each floor to run the VCV line is enumerated below:

7. The total load at different floors will be transferred through tower with RCC shear wall to the VCV tower footings, which is the foundation for the VCV tower. The dimension of the tower is 25 by 25 meters. Further, when the machine runs there will be a dynamic load on each floor which will be borne by the floor and subsequently the footing. Hence, VCV tower has to be constructed in a manner so as to withstand such heavy loads along with the self-load of the tower, wind load and seismic load.

8. For construction of the VCV tower, a Purchase order dated 29.05.2024 was issued to Shapoorji Pallonji and Company private limited (the supplier). Total expense is approximately 140.41 crores on which CGST and SGST will be discharged at approximately 12.63 crores under each head. In this case, the supplier is raising invoices by adopting SAC 995413 with the description “General construction services of industrial buildings” and discharging tax at the rate of 18%. The applicant is of the view that the input services received by them for the construction of the concrete structure are used for structural and foundational support of the VCV line, and accordingly, the ITC on such input services is eligible to them in terms of Section 16 and Section 17 of the CGST Act, 2017.

9. The applicant has asked the following question for Advance Ruling:

Whether the applicant is eligible to avail ITC on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the applicant, for manufacture of EHV cables, in terms of Section 17(5)(c) and (d) of the CGST Act, 2017?

10. Applicant’s statement containing interpretation of law is as under:

• The applicant’s question is covered under Section 97(2)(d) of the CGST Act, 2017.
• The inputs and input services procured by the applicant are in the course or furtherance of business of the applicant in terms of Section 16 of the CGST Act.
• As per Section 2(59) of the CGST Act, ‘input’ means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business.
• As per Section 2(60) of the CGST Act, the expression ‘input service’ is defined as any service used or intended to be used by a supplier in the course of furtherance of business.
• Section 16 of the CGST Act states that every registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both by him which are used or intended to be used in the course or furtherance of his business and said amount will be credited to the electronic ledger of such person.
• The VCV lines are to be used for manufacturing EHV cables which will be supplied by the Applicant to its customers. Thus, the inputs and input services procured by the applicant for construction of concrete tower to support and erect the VCV lines at the factory of the applicant is in the course or furtherance of business of the applicant.
• Thus applicant is eligible to avail the ITC on inputs and input services received for construction of concrete tower to support and erect the VCV lines at the factory of the applicant in terms of Section 16 of the CGST Act.
• Section 17(5) of the CGST Act stipulates the situation wherein ITC shall not be available, notwithstanding anything contained in Sections 16(1) and 18(1) of the said Act. In terms of Section 17(5)(c) and 17(5)(d) of the CGST Act, ITC cannot be availed in respect of the following:

“17. Apportionment of credit and blocked credits.

—-

(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following namely:

—–

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service.

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the course or furtherance of his business.”

• As per above provision, ITC is not restricted where the supply involves construction or \\ orks contract services pertaining to plant and machinery.
• The explanation to Section 17 of the CGST Act provides the definition of the expression “plant and machinery” as under:

“The term “plant and machinery” for the purposes of interpretation of the said provision is as under:

” For the purpose of this Chapter and Chapter VI, the expression ‘plant and machinery’ means apparatus, equipment and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-

(i) land, building or any other civil structures;

(ii) telecommunication towers; and

(iii) pipelines laid outside the factory premises;

• As per the Collins dictionary,(i) ‘equipment’ as a noun is defined as whatever a person, group or thing is equipped with, the special things needed for some purpose, supplies, furnishings, apparatus etc., goods used in providing service esp. in transportation as the rolling stock of a railroad. (ii) ‘apparatus’ as a noun is defined as a collection of instruments, machines, tools, parts or other equipment used for a particular purpose.
• As per Merriam Webstar Dictionary, (i) “equipment^– is defined as the set of articles or physical resources serving to equip a person or thing such as the implements used in an operation or activity. (ii) ‘Apparatus’ is defined as a set of materials or equipment designed for a particular use.

• As per Macmillan dictionary, ‘equipment’ is defined as the tools, machines, or other things that you need for a particular job or activity.
• Webstar’s Encyclopaedic Unabridged Dictionary of English language defines ‘apparatus’ as:

a. A group or aggregate of instruments, machinery, tools, materials etc. having a particular function or intended for a specific use.

b. Any complex instrument or machine for a particular purpose.

c. Any system or systematic organization of activities, functions, processes etc. directed towards a specific goal.

• The Concise Oxford Dictionary defines the terms: (i) ‘machine’ as an apparatus using or applying mechanical power and having several parts, each with a definite function and together performing a particular task. Any device that transmits a force or directs its appl ication(ii) ‘machinery’ is machines collectively or components of machinery.
• Reliance is placed on the decision of C.I3.(P) Ltd. Vs. Collector of Central Excise, Baroda, 1997 (95) ELT 239 (Tribunal), wherein the term ‘apparatus’ was defined.
• Reliance is also placed on the case of Siemens India ltd. Vs. Commissioner of Income Tax [1996]217 ITR622 (Boni), wherein reference was made to the common parlance test and functional test as applied in the Hon’ble Apex Court’s judgement in the case of Scientific Engineering House Private Limited vs. Commissioner of Income Tax, Andhra Pradesh 1986 (1) SCC (11) while deciding whether a particular thing was plant or not.
• Reliance is also placed on the decision of Inland Revenue Commissioner vs. Barclay, Curie & Co. Ltd. [1970] 76 ITR 62 (HL), wherein it was held that a dry dock, since it fulfilled the functions of a plant, must be held as a plant.
• Reliance is also placed on the case of Ambica Wood Works The State of Gujarat 1979 43 STC 338 (Guj.) which analysed the scope of machinery.
• Relying on the definitions of the term ‘apparatus’, it can be said that the VCV lines which arc to be set up for manufacturing EHV cables will qualify as ‘apparatus’ since the system includes setting up of a collection of instruments, tools, parts or other equipment used for a particular well-defined purpose.
• It can also be said to be ‘machinery’ as the complete VCV line is a combination of various things/components and the harmonious working of all such components results in the desired end of manufacturing EHV cables.
• The applicant has submitted that tests such as common parlance test, functional test, durability test and close nexus test are required to be conducted to determine whether the particular product qualifies as plant and machinery.
• In order to qualify as plant and machinery, in terms of Explanation to Section 17 of the CGST Act, two major requirements need to be satisfied:
• It is an ‘apparatus, equipment or machinery fixed to earth by foundation or structural support and
• It is used for making an outward supply of goods or services or both.
• Relying upon the definitions of the term ‘apparatus’, it can be said that VCV lines which arc to be set up for manufacturing EHV cables will qualify as ‘apparatus’ since the system includes setting up of a collection of instruments, tools, parts or other equipment used for a particular well defined purpose.
• It can also be said to be machinery as the complete VCV line is a combination of various things/components and the harmonious working of all such components results in the desired end of manufacturing EIIV cables.
• Further, (i) in common parlance test: the complete VCV line can be understood as `apparatus’ or ‘equipment’ (ii) in functional test: the VCV line has a well defined ‘Unction to manufacture EIIV cables. (iii) in durability test: the VCV line is expected to last for several years and hence it also satisfies this test. (iv) in close nexus test: the VCV line has a close nexus with the manufacturing of EHV cables in as much as having VCV line is a pre-requisite for manufacture of EHV cables and without such VCV line, the applicant will not be able to manufacture their end products viz. EIIV cables.
• In present case, the applicant will provide the outward supply of El IV cables manufactured using the VCV lines, thus the second condition stands fulfilled as well. Therefore, the VCV lines qualify as ‘plant and machinery’ in terms of explanation to Section 17 of the CGST Act.
• VCV line comprised of pulling capstans, extrusion cross head and CV tubes laid vertically is a manufacturing line for making EIIV cables. It is a triple layer co extrusion system which applies three critical layers into conductors simultaneously in a meticulously controlled and clean environment. The triple layer extrusion process in a VCV line is a method for manufacturing high-voltage cables where the inner semiconductor, XI,PE insulation and outer semiconductor layers are applied simultaneously in a single, continuous operation.
• The vertical orientation of the CV tube is necessary as it ensures a straight, tensioned path with minimal mechanical stress on the conductor and the insulation layers. This straight path is crucial as it minimizes any deformation of the cable as it moves through the process, which in turn minimizes eccentricity — the off center placement of the conductor within the insulation.
• The machinery inside the VCV line is at a height of 146 meters from ground level and 17 meters underground and is in the nature of a system of various components functioning together connected through pipelines, ducts, etc. and functions as a manufacturing line for EHV cables. Therefore, the VCV lines qualify as ‘plant and machinery’ in terms of Explanation to Chapter V of the CGST Act.
• The construction of concrete RCC shear wall and concrete foundation arc for foundation and structural support for VCV lines, which arc plant and machinery in terms of Explanation to Section 17 of the CGST Act.
• In order to erect the VCV line in a vertical orientation at a height of 146 metres from ground level and 17 meters underground, the machinery has to be supported by concrete RCC shear wall and concrete foundation and the concrete structure in the form of VCV tower serves as a critical foundation and support system for the entire cable manufacturing process. The concrete structure provides a stable base for the tower components, ensuring that the entire system remains steady during cable production. It supports the weight of various equipments, including the extruder, crosshead, capstan and take up stand. The concrete structure absorbs vibrations, minimizing their effects on the cable manufacturing process. Furthermore, the proper alignment of the tower components is crucial for consistent cable insulation. The concrete foundation ensures accurate positioning of the extruder, crosshead and other elements. The concrete structure also defines the cable pathway from the pay-off stand to the take up stand. Thus, the concrete structure in a VCV tower plays a fundamental role in maintaining stability, precision and overall efficiency throughout the manufacturing process of insulated cables.
• The VCV tower is being constructed for the purpose of providing support to the VCV lines. It will help in connecting various equipment of the VCV line together and hold them in vertical position at an elevated height so that the VCV line is able to perform the desired function of manufacturing insulated EI-IV cables.
• Reliance is placed on the recent ruling issued by the Appellate Authority for Advance Ruling (AAAR), Gujarat in the case of In Re: KM Industries Limited reported at 2025-VIL-37-AAAR wherein the AAAR allowed the credit of inputs and input services used for the construction of a concrete tower which acts as a foundation and structural support for VCV manufacturing line as eligible to the appellant. The applicant has submitted that the ruling of the AAAR is squarely applicable in this case.
• Reliance is placed on the decision in the matter of (i) the ruling passed by the AAAR, Tamilnadu In Re: M/s. Shibaura Machine India Pvt.ltd. 2025 (9j TMI 731 wherein the Appellate Authority allowed proportionate ITC in respect of the secondary steel structural support that is relatable exclusively to the overhead crane movement and IIVAC machine.
• Reliance is placed on the decision in the case of Sirpur Paper Mills Ltd. [1998 (97) ELT 3 (SC) wherein it was held that plant and machinery are capable of being dismantled and sold without being destroyed and arc only embedded to the earth because of operational efficiency, it is not immovable property. Applying this ratio, the ITC on inputs and input services procured for construction of concrete tower for erection and support of VCV lines is eligible to the applicant.
• Reliance is also placed on the Supreme Court of Canada’s decision in the case of British Columbia Products Ltd. V Minister of National Revenue1971 Canl.II156 (SCC) which held that chemical recovery units and tanks arc structures, not buildings.
• The aforesaid multi-storied VCV tower is constructed only for the purpose of providing, structural support to the VCV manufacturing line, without which such VCV line cannot operate smoothly and therefore, the said VCV tower will get covered under the definition of ‘plant and machinery’ in terms of Explanation to Chapter V of the COST Act.
• As per the definition of ‘plant and machinery’ under Explanation V of the COST Act, it specifically excludes land, building or any civil structure; telecommunication towers and pipelines laid outside the factory from the scope of plant and machinery.
• The term ‘civil structures’ appearing in the exclusion clause of the definition of ‘plant and machinery’ is not defined under the CGST Act.
• As per P. Ramanatha Aiyar’s Advanced Law Lexicon, ‘Structure’ is defined to be that which is built or constructed, an edifice or a building of any kind in the wildest sense, any production or piece of work artificially built up or composed of parts and joined together in some definite manner. The word building or structure is not defined in the pre-emption Act but it may be stated that every building is a structure though every structure is not a building and the word structure can be applied to a wall or a shed or any other unsubstantial erection for which the word building cannot be used (AIR 1924 Lah 172). ‘Structure’ by itself may not be a building but it may be analogous to a building, outhouse, shed, hut or stable. (Municipal Corporation of Greater Bombay vs. Indian Oil Corporation Ltd., AIR 1991 SC 686).
• Black’s Law Dictionary defines ‘structure’ as a ‘framework or construction with elements identifiable giving stability and form and able to resist strains and stresses.
• A civil structure will cover only that property in which a business is carried on, and not that property with which such business is carried on. In the instant case, the VCV tower will not be constructed for housing the VCV line but will serve as a support for operating and maintaining the VCV lines and holding it in position.
• Thus, the concrete RCC shear wall and concrete foundation to install and set up the VCV lines at a height of 146 meters from ground level and 17 meters underground are not falling under the scope of the term ‘civil structure’, as such concrete RCC shear wall and foundation are for structural and functional support of plant and machinery viz. VCV lines in terms of Explanation to Chapter V of the COST Act.
• In the case of The Municipal Corporation of Great Bombay and others vs. the Indian Oil Corporation Ltd. AIR 1991 SC 686, the I-Ion’ble Apex Court observed that ‘structure’ must be entity in itself, although not necessarily a building in itself, adopted to the particular purpose it serves. In it’s ordinary sense, a structure is something which is constructed by way of being built as is a building. But the method of construction is not conclusive. Structure by itself may not be a building but it may be analogous to a building, outhouse, shed, hut or a stable.
• The applicant submits that placing reliance on the above decision, wherein the meaning of ‘structure’ was analysed, even if a view is taken that the multi-storied VCV tower will qualify as a structure which will be built and constructed, it will not alter the fact that such structure of multi-storied tower is being built only for supporting the VCV lines. Thus, such a structure will get covered as a structural support under the definition of plant and machinery.
• Reliance has also been placed on C13IC’s circular No.219/13/2024-GST dated 06.2024 wherein it is mentioned that ducts and manholes arc covered under the definition of ‘plant and machinery’ as they are used as part of the OFC network for making outward supply of transmission of telecommunication signals from one point to another and arc neither in the nature of land, building or civil structures nor in the nature of telecommunication towers or pipelines outside the factory premises.
• The applicant, placing reliance on the above circular submits that an inference can be drawn that since the VCV concrete tower is essential structure for holding the VCV line vertically, it can be said that it is an essential structure for manufacturing of EIIV cables i.e. indispensable structure for carrying out the manufacturing operations and not explicitly excluded from the definition of ‘plant and machinery’ as provided in the Explanation to Section 17 of the CGST Act, 2017. VCV concrete tower will fall within the term ‘plant and machinery’ in terms of Explanation to Section 17 of the CGST Act, 2017.
• In the light of the submissions the applicant submits that the ITC on inputs and input services procured for construction of concrete tower to erect and support the VCV lines in the factory of the applicant is eligible, as it is for foundation and structural support of plant and machinery in terms of Section 17 of the CGST Act.

11. Personal hearing was granted on 08.04.2026 wherein Ms. Priyanka Kalwani and Ms. Aanchal Trivedi, appeared on behalf of the applicant and reiterated the facts grounds as stated in the application. During the course of hearing, the representatives of the applicant has submitted a set containing relevant legal provisions of the Central Goods and Service Tax Act, 2017 as well as copy of relevant Circular and supporting judgement.

Discussion and findings

12. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same, except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act.

13. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made both oral and written during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant’s submissions/views in respect of question on which the advance ruling is sought. We also considered the written submission provided by the Deputy Commissioner(Division-1, Halol, Vadodara-II) dated 06/03/2026.

14. We find that the applicant is in the process of setting up of a new manufacturing plant in Waghodia, Vadodara for making EHV cables using the Vertical Continuous Vulcanization (VCV) process for making EHV cables, that the manufacturing line is equipped with pulling capstans, extrusion crosshead and continuous vulcanization tubes (CV tubes) which are laid vertically in the plant. The VCV process is an advanced manufacturing technique used to produce EHV cables with superior reliability and performance and that this method is defined by its triple-layer co-extrusion system, which applies three critical layers onto a conductor simultaneously in a meticulously controlled, clean environment and all 3 layers are extruded simultaneously in one step to prevent contamination and ensure perfect bonding. The VCV manufacturing line is required to be supported by concrete structure in square form on all sides, has a height of 163 meters out of which approximately 146 meters is from the ground and 17 meters underground. The VCV tower comprises 17 floors with each floor having a height of between 6-12 meters. Height of each floor varies as per the requirements of the manufacturing line and it also consists of passenger lifts and material handling lifts installed therein, a staircase with emergency exit and fire hydrants on each floor. The VCV tower will be used exclusively for the purpose of manufacturing EHV cables. The process inside the VCV tower undertaken and equipment on each floor is summarized at para 5 above. The weight of the significantly heavy components to be placed on each floor to run the VCV line is enumerated at para 6 above.

15. The applicant has further submitted that the total load at different floors will be transferred through tower with RCC shear wall to the VCV tower footings, which is the foundation for the VCV tower with the dimension of the tower being 25 by 25 meters, that when the machine runs there will be a dynamic load on each floor which will be borne by the floor and subsequently the footing, hence, VCV tower has to be constructed in a manner so as to withstand such heavy loads along with the self-load of the tower, wind load and seismic load. For construction of the VCV tower, a Purchase order dated 29.05.2024 was issued to Shapoorji Pallonji and Company private limited (the supplier), that total expense is approximately 140.41 crores on which CGST and SGST will be discharged at approximately 12.63 crores under each head and in this case, the supplier is raising invoices by adopting SAC 995413 with the description “General construction services of industrial buildings” and discharging tax at the rate of 18%. The applicant is of the view that the input services received by them for the construction of the concrete structure are used for structural and foundational support of the VCV line, and accordingly, the ITC on such input services is eligible to them in terms of Section 16 and Section 17 of the CGST Act, 2017.

16. The applicant has asked the following question for Advance Ruling:

Whether the applicant is eligible to avail ITC on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the applicant, for manufacture of EHV cables, in terms of Section 17(5)(c) and (d) of the CGST Act, 2017?

17. Before referring to the averments raised by the applicant, we find it prudent to refer to the process undertaken at different levels in the VCV tower for manufacturing of EI-IV cables and the equipments on each floor of the VCV tower. The same is summarized below for reference.

18. The weight of the significantly heavy components to be placed on each floor to run the VCV line is enumerated below:

In short, the applicant has upgraded their technology to manufacture EHV cables by using VCV process. For the same, the VCV manufacturing line is required to be supported by a concrete structure. Thus, the primary issue is about the eligibility of ITC on inputs and input services used in the construction of the concrete tow VCV tower i.e

19. The gist of the averments raised is that the contract for construction of VCV tower was awarded to M/s. Shapoorji Pallonji & Company private limited, which was in the nature of the works contract; that the inputs and input services received for the construction of the concrete structure are used for foundational & structural support of the VCV line; that the VCV line will qualify as apparatus, that the VCV tower is an essential structural support to the entire VCV machine line, hence is squarely covered within the definition of ‘plant and machinery’ in terms of explanation to section 17(5) and that even if the expenses incurred towards such goods and services are capitalized by the applicant in its books of accounts, it qualifies for plant and machinery.

20. Since the issue revolves around the interpretation of section 17, ibid, it is obligatory to refer to the said section for ease of reference:

Section 17. Apportionment of credit and blocked credits-

(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub­section (1) of section 18, input tax credit shall not be available in respect of the following, namely.–

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation.-For the purposes of clauses (c) and (d) the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

Explanation.- For the purposes of this Chapter and Chapter VI, the expression “plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-

(i) land, building or any other civil structures;

(ii) telecommunication towers; and

(iii) pipelines laid outside the factory premises.

21. We find that irrespective of the fact that whether the event of construction of the VCV tower is a works contract or otherwise, in terms of section 17(5) (c) and (d), plant and machinery stand excluded from the apportionment of credit and blocked credits. Further, although “Structural support” has not been defined in the CGST Act, it is evident from the meanings given in renowned dictionaries such as Cambridge, Oxford and Merriam Webstar that ‘structural support’ refers to a physical or foundational clement that forms part of a larger structure and serves the purpose of holding, bearing, or stabilizing loads which ensures that the structure or equipment it supports remains secure from external forces. Thus, the concrete structure in the form of VCV tower provides structural support with the necessary height and infrastructure while maintaining the structural integrity, stability, precision and overall efficiency of the support system for manufacture of EI-IV cables and is thus an essential structural support to the entire VCV machine line in the manufacture of EFIV cables.

22. On going through the layout of the VCV tower and the process undertaken at different floors in the VCV tower and the weight of the significantly heavy components to be placed on each floor as detailed in para 17 and 18 above, we are in agreement with the applicant’s averment that the VCV tower made of concrete structure is essential to support and erect the VCV lines. It is more so since the applicant has stated that the concrete structure in the form of VCV tower serves as a critical and essential structural support system to the entire VCV machine line for manufacture of EI-IV cables while maintaining the structural integrity, stability, precision and overall efficiency of the support system for the manufacture of EI-IV cables. Given these facts, we find that plant and machinery in terms of the second explanation, placed beneath section 17, ibid, specifically includes foundation and structural support. The exclusions from plant and machinery are also listed viz (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Further, ‘other civil structures’ means civil structures other than foundation and structural support to plant and machinery.

23. Thus, the moment it is held that the ITC sought is on construction of foundation and structural support relating to plant and machinery, it moves out of the ambit of section 17(5)(c) and (d) even if it is on their own account. This being the case, we find that the applicant is eligible for availing the ITC on inputs services used for construction of concrete VCV tower to support and erect the VCV lines at the factory of the applicant for manufacture of EHV cables.

24. The applicant, has also relied upon the clarification issued by CBIC vide its Circular No.219/13/2024-GST, dated 26.06.2024 which reads as under:

25. Drawing the analogy from the aforementioned clarification, we find that when ITC is not restricted even in respect of ducts and manhole used in OFCs under section 17(5) of the CGST Act, 2017, the ITC, on inputs and input services used for construction of concrete VCV tower to support and erect the VCV lines, for manufacture of El IV cables also, similarly, cannot be restricted.

26. We also find that the Hon’ble Gujarat Appellate Authority of Advance Ruling in a similar case of M/s. KEI Industries ltd. [2025(8) TMI 551] (in Advance Ruling (Appeal) No.GUJ/GAAAR /APPEAL/2025/114 dated 31.07.2025(in Application No. Advance Ruling/SGST & CGST/ 2025/ AR/02) had held that the appellant was eligible to avail ITC on the inputs and input services used for the construction of a concrete tower to support and erect the vertical continuous vulcanization (VCV) lines. The applicant is also found to have relied upon this decision to support their cause.

27. For the reasons mentioned above, we find and conclude that the applicant is eligible to avail input tax credit on inputs and input services used in the setting up of the vertical catenary vulcanization tower (VCV tower) at the factory of the applicant for the manufacture of EI-IV cables. Further, since the ruling is being made in the favour of the applicant, we do not find the need to discuss the averments as well as the cases relied upon by the applicant as the same would at best only be of academic interest.

28. In view of the above, we rule as under: –

RULING

Q,1 Whether the applicant is eligible to avail ITC on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the applicant, for manufacture of EIIV cables, in terms of Section 17(5)(c) and (d) of the CGST Act, 2017?

A.1 Yes, the applicant is eligible to avail ITC on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the applicant, for manufacture of EHV cables, in terms of Section 17(5)(c) and (d) of the CGST Act, 2017