Input tax credit on CCV tower construction allowed as the structure qualified as plant and machinery, not blocked immovable property.

Input tax credit on inputs and input services used to construct a continuous catenary vulcanization tower was held admissible because the tower was treated as part of plant and machinery, not as construction of disqualified immovable property. The ruling applied the blocked-credit exclusion for works contract services and other goods or services used for construction of immovable property, but found that plant and machinery includes apparatus, equipment and machinery fixed to earth with foundation or structural support, while excluding buildings and other civil structures. As the tower was a specialised steel structure integral to supporting and erecting the CCV line and essential to manufacture, the credit was not barred.

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Issues: Whether input tax credit is available on inputs and input services used for setting up the continuous catenary vulcanization tower used for manufacture of insulated cables, and whether such credit is barred under the blocked credit provisions relating to construction of immovable property other than plant and machinery.

Analysis: The ruling turned on the statutory exclusion for works contract services and other goods or services used for construction of immovable property, except where the construction is of plant and machinery. The expression "plant and machinery" was applied to mean apparatus, equipment and machinery fixed to earth by foundation or structural support, including such foundation and structural supports, but excluding land, building, other civil structures, telecommunication towers and pipelines laid outside the factory premises. On the facts, the tower was found to be a specialised steel structure essential to support and erect the CCV line, with its height, layout and load-bearing function being integral to the manufacturing process. The tower was therefore treated as structural support for the machinery and not as a disqualifying civil structure. The clarification issued on ducts and manholes used in optical fibre cable networks was also relied upon by analogy to support the conclusion that such support structures are not hit by the restriction when they form part of plant and machinery.

Conclusion: Input tax credit on inputs and input services used for construction of the CCV tower is admissible and is not blocked under the cited provisions.

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