ITC on Greenhouse structure for ETP plant

[Yatin Bhopi]

We are manufacturer of Organic chemicals. We have recently installed greenhouse structure falling under HSN 9406 for our effluent treatment plant. expenses will be capitalised under Buildings.

Please let me know whether ITC will be available?

[Rajagopalan Ranganathan]

Sir,

According to Section 2 (19) of CGST Act, 2017 “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business. Therefore you are eligible to avail ITC of gst paid on the capital goods.

[Ganeshan Kalyani]

Needless to mention, the outward supply should be taxable. And the input tax should not be capitalized along with the asset to claim credit. Either claim credit or capitalize it and claim the depreciation under IT.

[KASTURI SETHI]

Section 17(5)(c) &(d) of CGST Act

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation. - For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

In my view, there is not any kind of restriction on plant & machinery regarding availment of ITC on plant and machinery (except depreciation condition). Thus if you are able to prove that 'Greenhouse structure' is a plant', ITC is admissible. Plant and machinery stand excluded from the exclusion clause and hence not hit by Section 17 (5)(c) &(d). Views from others may also be welcomed. This is my view and interpretation. Other experts may or may not differ.

CESTAT Mumbai in the undermentioned judgement has held that greenhouse structure is a plant. This case law is based on various judgements (including Supreme Court) and Board's circulars. Kindly go through are case laws and circulars word for word.

2018 (8) G.S.T.L. 276 (Tri. - Mumbai) = 2017 (9) TMI 937 - CESTAT MUMBAI SRIROZ CONSULTANTS PVT. LTD. Versus COMMISSIONER OF C. EX., PUNE-I

[Yatin Bhopi]

Thanks a lot for clarifying and sharing case law

AI Summary

Input tax credit availability depends on greenhouse being classified as plant, not immovable property, for GST credit. ITC on a greenhouse for an effluent treatment plant depends on its classification as capital goods: goods capitalised in the claimant's books and used in business qualify for ITC. Section 17(5) excludes capitalised goods used for construction of immovable property except plant and machinery; if the greenhouse is shown to be plant, the exclusion does not apply. Claimants must not capitalise input tax where ITC is claimed and should consider depreciation treatment. A CESTAT Mumbai ruling classifying greenhouse as plant supports this position.