INPUT TAX CREDIT FOR MINING & CRUSHING OPERATION

[CADeep Upadhyay]

One of my clients is involved in stone mining, crushing and selling of crushed stones viz. Grit, Kapchi, Stone Dust etc. He mainly use following capital assets viz. Dumper Trucks, Earth Moving Motor Equipment (viz. JCB 3DX, L&T PC 200 etc.), Crusher Plants for operations. My major queries are:

1. Whether I am allowed to take ITC of GST paid on purchase of Dumper Trucks / Earth Moving Equipment or not?

2. Whether I am allowed to take ITC of GST paid on Tyre & Tubes of Dumper Trucks / Earth Moving Equipment or not?

3. Whether I am allowed to take ITC of GST paid on lubrication oil for Crusher Plant or Not?

Relevant legal provisions prevail in Section 17 (5) of CGST Act, 2017.

C.A. Deep Rajesh Upadhyay

[Rajagopalan Ranganathan]

Sir,

As per sl. No. 126 of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017 "Pebbles, gravel, broken or crushed stone, of a kind commonly used for concrete aggregates, for road metalling or for railway or other ballast, shingle and flint, whether or not heat-treated; macadam of slag, dross or similar industrial waste, whether or not incorporating the materials cited in the first part of the heading; tarred macadam; granules cheeping and powder of stones heading 2515 or 2516 whether or not heat treated are classifiable under heading 2517 attracting CGST @2.5%. Therefore CGST paid on the items indicated by you is eligible to avail as credit under CGST Act, 2017 by your client. Section 17 (5) of CGST Act 2017 is not applicable to your client.

[Himansu Sekhar]

I am quoting the answer through thefaq released by the department

Question 21: Will GST charged on purchase of all earth moving machinery including JCB, tippers, dumpers by a
mining company be allowed as input credit?
Answer: The provision of Sec. 17(5) (a) of the CGST Act, 2017 restricts credit on motor vehicle for specified purposes listed therein. Further, in terms of the provision of Section 2(76) of the CGST Act, 2017 the expression ‘motor vehicle’ shall have the same meaning as assigned to it in Clause (28)
of Section 2 of the Motor Vehicle Act, 1988, which does not include the mining equipment, viz., tippers, dumpers. Thus, as per present provisions, the GST charged on purchase of earth moving machinery including tippers, dumpers used for transportation of goods by a mining company will be allowed as input credit.

[Himansu Sekhar]

There is no restriction in taking credit in respect of point 2 and 3.

AI Summary

Input tax credit eligibility for mining equipment affirmed; GST on earth moving machinery and consumables is allowable as credit. GST paid on earth moving machinery used in mining, including tippers and dumpers, and on tyres, tubes and lubrication for crusher plants, is eligible as input tax credit because such mining equipment is excluded from the statutory motor vehicle definition and restrictions on motor vehicle credit do not apply; crushed stone used as aggregate is classified under the notified tariff, supporting credit eligibility for related purchases.