In re CPL Pharmaceuticals Private Limited (GST AAR Gujarat)
The matter concerns an application for advance ruling on whether input tax credit (ITC) is available on input services used for construction of foundation and structural support for plant and machinery in an Active Pharmaceutical Ingredients (API) manufacturing facility.
The applicant is engaged in manufacturing APIs and has established a new plant at Dahej, Gujarat. The manufacturing process involves multiple stages such as chemical reactions in reactors, distillation, crystallization, filtration, drying, milling, and packaging. Various equipment including reactors, condensers, filters, dryers, sifters, and utilities like boilers and HVAC systems are used. These machines require specialized foundations due to operational loads, vibrations, and alignment requirements.
To support such equipment, the applicant undertook extensive civil, structural, and architectural works, including construction of RCC foundations, steel structures, pipe racks, tank farms, sub-stations, boiler blocks, and water treatment plants. These structures were specifically designed to bear heavy loads and ensure safe and stable operation of machinery. A Chartered Engineer’s inspection confirmed that the RCC and steel structures were necessary solely for supporting machinery and ensuring operational stability.
The construction services were provided by a contractor who charged GST at 18%, and the applicant availed ITC on such services. The applicant contended that these input services were used in the course or furtherance of business and directly related to plant and machinery. It was argued that the definition of “plant and machinery” under the CGST Act includes apparatus, equipment, and machinery fixed to earth by foundation or structural support, and explicitly includes such foundation and structural supports.
