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The ARA, Rajasthan has pronounced judgment on 13.9.2021, in the case of Pristine Industries Ltd. (2021) 36 J.K.Jain’s GST & VR 362, HELD that ‘The applicant is eligible to take ITC on ‘inputs/capital goods/input services’ used for setting up of ‘Solar Power Generating Plant’ for generation of electricity for captive consumption, in the business of manufacturing PP/HDPE Woven Sacks and ITC is not blocked u/s 17(5)(d),GST Act, 2017.

It has been further held that Construction of “Solar Power Generating Plant” at roof top of the building of applicant, qualifies as “Plant and Machinery”.

1. Background.─The Applicant is under the process of installation of a 620+kw roof top “Solar Power Generating Plant” at its manufacturing unit for captive consumption of electricity so generated from the above plant for its PP/HDPE Woven Sacks manufacturing unit at Abu Road.

2. Findings by ARA.─S.16(1), CGST Act specifically provides that every registered person shall be entitled to take credit of the input tax charged on any supply of goods or services or both made to him, which are used or intended to be used in the course or furtherance of his business.

ITC is allowed on entire “Solar Power Generating Plant”


Such entitlement is subject to fulfillment of certain conditions enumerated under S.16(2), GST Act, 2017.

However, the availability of credit is subject to the restrictions as stipulated     u/s 17(5)(d), GST Act, 2017.

The applicant intend to install “Solar Power Generating Plant” at the roof top of its own building set up. Further, the applicant has furnished the list and has not furnished any documentary proof to establish that the goods listed in the statement furnished have been capitalised in their books of accounts. Therefore, subject to the goods being capitalised in their books of account, the applicant may be eligible to claim Input tax on such goods as ‘Capital Goods’ and the Provisions of Rule 43, GST Rules is applicable to determine the eligible credit in respect of the taxable supplies made by them. It is admitted by the applicant that they are getting installed a 620+kw roof top “Solar Power Generating Plant” on its own building set up and that the ownership of the property shall remain with them.

Further, for the purposes of clauses (c) and (d) of S.17(5), CGST Act, 2017, the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.

Hence, the erection, commissioning and installation of the said power plant covers in expression of ‘construction’

3. Analysis by ARA.─As far as question whether the capital goods and inputs constitute plant and machinery of the Applicant is concerned, the explanation to S.17(5) provides “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.

The terms apparatus, equipment and machinery has been examined as under:

Apparatus: A group of instruments, tools, etc. for a specific use Any complex instrument or machine. A collection of equipment used for a particular purpose. Is a compound instrument designed to carry out a specific function or for a particular use. Is a kind of word which as a generality extends widely and is not confined to things which are capable of being operated so as to generate some kind of result.

Equipment:‒The machines tools, or instrument etc. necessary for a particular kind of work or activity.

Machinery:‒In a generic sense, would include all appliances and instruments whereby energy or force is transmitted and transformed from one point to another.

4. Conclusion by ARA.─In view of the above, “Solar Power Generating Plant” of the applicant qualify as ‘plant and machinery’ as it falls under machinery as discussed above and not covers under (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Therefore, subject to the goods being capitalised in their books of account, the said plant is ‘Capital Goods’. The “Solar Power Generating Plant is to be used for generation of electrical energy, the electrical energy is solely for captive/own use for the manufacture and supply of taxable goods (i.e., PP/HDPE Woven Sacks). The business of the applicant is manufacture and sale of PP/HDPE Woven Sacks and the solar power plant meets the criteria of being used in the business of manufacture and sale of PP/HDPE Woven Sacks since the power generated from this plant is used to operate the PP/HDPE Woven Sacks manufacturing plant.

Although, construction of “Solar Power Generating Plant at roof top of the  building of applicant is an immovable property, however the said “Solar Power Generating Plant qualify as plant and machinery”, hence it not covered under blocked credit as mentioned in 17(5)(d) of the CGST Act, 2017. Thus, the applicant is eligible for Input credit of Inputs, Capital goods and Services related to setting of Solar Power generator plant for captive consumption.

5. Ruling by ARA.─In view of the foregoing, the ARA Ruled as under;

The Applicant is eligible to take ITC as ‘inputs/capital goods or “input services” of the various items in terms of S.16 and 17 of the CGST/RGST/IGST Act? Additionally, the capital goods and inputs constitute plant and machinery of the Applicant which are used in the business of Manufacturing PP/HDPE Woven Sacks and hence not blocked ITC u/s 17(5), CGST/RGST/IGST Act?

Author Bio

I am s/o J.K.Jain , Jaipur & is Writer & Analyst of Fortnightly magazine "J.K.Jain's GST & VR". Extended Consultation work of GST. Expert in Commentary of GST/VAT. My e-mail ID is & Tel No. is 9414300730/9462749040. Analytical interpretation of GST Act/Rules a View Full Profile

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One Comment

  1. Jay says:

    agar electricity ko respective electricity board ko sale kare to bhi uski ITC milege…kyuki vo sale exempt sale ho jata my opinion we can’t claim ITC when the output is exempt.

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June 2024