In re Shibaura Machine India Private Limited (GST AAR Tamilnadu)
ITC on Structural Steel Supports for Cranes and HVAC Allowed, ITC on Civil & PEB Sheeting Blocked: AAR Tamil Nadu
The Tamil Nadu Authority for Advance Ruling (AAR) delivered its ruling in the matter of In re Shibaura Machine India Private Limited, where the primary issue concerned the eligibility of input tax credit (ITC) on procurement of goods and services related to the construction of a new factory, particularly pre-engineered building (PEB) structural steel works.
Facts and Issues
The applicant, a manufacturer of injection moulding machinery, engaged M/s SMCC Construction India Ltd. for the construction of a new factory. The total contract value included four components: (i) civil works worth ₹49.30 crore, (ii) PEB works worth ₹27.29 crore, (iii) fire-fighting system worth ₹4.65 crore, and (iv) public health engineering works worth ₹1.74 crore. The applicant admitted that ITC on civil works and sheeting was blocked under Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017, but claimed ITC on structural steel supports forming part of PEB works, amounting to ₹22.42 crore.
The key questions before the Authority were:
- Whether the execution of the PEB project resulted in the creation of immovable property.
- Whether the project qualified as a works contract.
- Whether structural steel works supporting cranes and HVAC systems qualified as “plant and machinery.”
- The timeline for availing ITC on invoices raised against advance payments.
Statutory Framework
The AAR examined Section 16(1) of the CGST Act, which entitles registered persons to ITC on goods and services used in business, subject to conditions. However, Section 17(5)(c) and (d) restrict ITC on works contract services and construction of immovable property, except in relation to “plant and machinery.”
