In re HMSU Rollers (India) Pvt. Ltd. (GST AAR Gujarat)
Factory Building Structure Not ‘Plant and Machinery’, Input Tax Credit Denied: Gujarat GST Authority
Ahmedabad: In a recent ruling with implications for manufacturers undertaking factory expansion, the Gujarat Authority for Advance Ruling (AAR) has held that Input Tax Credit (ITC) is not admissible on the goods and services used for constructing an integrated factory building, including a Pre-Engineered Building (PEB) structure designed to support an overhead crane. The authority classified such construction as immovable property, falling under the blocked credit provisions of the GST law.
The case, In re HMSU Rollers (India) Pvt. Ltd., involved an applicant engaged in the manufacturing of rollers who was expanding its facility. The expansion included the installation of a PEB structure intended to house and support a 10 Ton overhead crane, crucial for their operations. The applicant sought an advance ruling on the eligibility of proportionate ITC on three categories of inward supplies:
a) Steel, cement, and other consumables used in the execution of works contract for the factory building construction, including the gantry beam for the crane.
b) Installation and erection services for the PEB structure.
c) Other capital goods like rails and electrification installed for the crane’s operation.
The applicant argued that the PEB, being specifically designed with a gantry beam to bear the crane’s load and facilitate its operation, should be considered part of ‘plant and machinery’. They contended that the entire structure was essential for the functioning of the overhead crane, rendering it more than just a conventional building. A Chartered Engineer’s certificate detailing load calculations was submitted to support this claim.
