In re Nitta Gelatin India Limited (GST AAR Kerala)
In a significant ruling for manufacturing entities, the Kerala Authority for Advance Ruling (AAR) has determined that Nitta Gelatin India Limited is eligible to claim Input Tax Credit (ITC) on Goods and Services Tax (GST) paid for the construction of a fresh water storage tank and a ‘guard pond’ (effluent storage tank). This decision, which hinges on whether these structures qualify as “plant and machinery” rather than “civil structures,” offers clarity on a long-debated aspect of GST law concerning capital goods in manufacturing.
Nitta Gelatin India Limited, a manufacturer of Gelatin, sought an advance ruling to confirm its eligibility for ITC on the GST incurred for building a 2,000 KL fresh water storage tank and a 7,000 KL guard pond at its Koratty manufacturing unit. The company contended that these facilities are essential for maintaining uninterrupted production—the fresh water tank ensures a continuous water supply, while the guard pond manages effluent as per pollution control norms, preventing operational disruptions. The company emphasized that both structures are crucial and integral components of their plant and machinery, capitalized in their books of accounts as such. They argued that despite being constructed using civil work elements like cement and concrete, these are not mere civil structures but functional apparatus vital for the manufacturing process.
