Case Law Details
In re Elixir Industries Private Limited (GST AAR Gujarat)
In a recent ruling by the Authority for Advance Ruling (AAR) Gujarat, Elixir Industries Pvt. Ltd. sought clarity on whether they could claim Input Tax Credit (ITC) on capital goods like wires, cables, and electrical equipment used to transmit electricity to their factory premises. This article delves into the specifics of the ruling and its implications.
Elixir Industries, an 100% Export Oriented Unit (EOU), required a substantial power connection from Gujarat Energy Transmission Corporation Ltd. (GETCO). They opted to install a 66 KV feeder bay and associated cables over a considerable distance to connect their Palej factory. The equipment, although installed outside the factory premises, was crucial for their manufacturing operations.
GETCO offered two installation options, with Elixir choosing to procure materials themselves. This decision aligned with their intention to capitalize the installation costs under the GST framework, aiming to claim ITC on both the basic material costs and associated GST.
The crux of the issue revolved around whether these expenditures qualified under Section 16 of the CGST Act, 2017. Elixir argued that since the equipment wasn’t part of any construction but essential for their business operations, it shouldn’t fall under the blocked credits specified in Section 17(5) of the Act.
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