ITC on GST paid for stone breaking charges within plant A manufacturing company acquires land nearby it’s existing boundary for expansion of plant.

[BipadBhanjan dixit]

A manufacturing company acquires land nearby it’s existing boundary for expansion of plant. The major part of the acquired land is having high land with big rock which requires demolition for conversion into plane surface for use by plant in any purpose. The company after taking permission from the Mining department, appoint contractor for braking and shifting the stones after conversion by using it’s machine, labour etc, and for that the contractor issue invoice as “rock breaking charges” to company.

The company also pay GST on royalty paid to Government under the RCM basis.

The final product i.e stone is used by the company for internal road and boundary wall etc… within the pant.

A manufacturing company acquires land nearby it’s existing boundary for expansion of plant. The major part of the acquired land is having high land with big rock which requires demolition for conversion into plane surface for use by plant in any purpose. The company after taking permission from the Mining department, appoint contractor for braking and shifting the stones after conversion by using it’s machine, labour etc, and for that the contractor issue invoice as “rock breaking charges” to company.

The company also pay GST on royalty paid to Government under the RCM basis.

The final product i.e stone is used by the company for internal road and boundary wall etc… within the pant.

Whether the ITC is allowable on GST paid to contractors for rock braking charges?

GST paid on royalty on removal of such stones is allowable as ITC under GST Act,2017?

Whether the service of rock breaking charges will hit under the blocked credit u/s 17(5) (c ) & (d) of the CGST Act,2017 as works contract service or construction Service.

What will be the correct classification of such service.

[YAGAY andSUN]

Involved Matter is not free from doubts, better to have a Advance Ruling.

AI Summary

Input tax credit eligibility for rock breaking services may turn on classification and blocked credit provisions affecting recovery. Whether input tax credit is allowable on GST paid to contractors for rock breaking and on GST paid as royalty under the reverse charge mechanism, and whether the rock breaking service is a works contract or construction service attracting the blocked credit provisions of section 17(5)(c) and (d) of the CGST Act, given the stone is used internally within the plant; an advance ruling is recommended due to classificatory uncertainty.