ITC on Transformer and related Electrical and civil fittings

[ROHIT GOEL]

A client has installed an electric transformer which supplies direct electricity from power station to its factory. For said purpose, it has erected Cement poles, electrical wring as well as hired contractor who has fitted the entire setup with his labour as well as materials.

Whether ITC on the same is allowed or blocked u/s 17(5)?

[Padmanathan KV]

In my opinion, electrical transformer is not part of building and hence, ITC is not blocked under section 17(5). However, it might be highly contentious issue.

[Alkesh Jani]

Shri

With regards to query, full facts are required, however, the decision of Hon'ble Gujarat High Court in case of torrent power may be referred. Hope this may help you.

Thanks

[Rajagopalan Ranganathan]

Sir,

In my opinion, the electric transformer is part and parcel of the plant since without electricity the plant cannot be put to use. Therefore they are used in the course of or furtherance of business. Hence gst paid on the goods and services is available as credit.

[Shilpi Jain]

If this is given as one contract to a person, i.e. supply of goods + service, this being for a P&M, credit would be eligible.

[Amit Agrawal]

Explanation under Section 17 is worth noting, in the context of the query raised:

"Explanation.–– For the purposes of this Chapter and Chapter VI, the expression “plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-

(i) land, building or any other civil structures;

(ii) telecommunication towers; and

(iii) pipelines laid outside the factory premises."

[Ganeshan Kalyani]

Transformer may be called as an apparatus which falls under the definition of 'plant and machinery' and therefore ITC is allowed. Also the civil structure which makes the transformer stand is eligible for ITC.

[DIPANKAR VIG]

Any Advance Ruling or judicial pronouncement which support ITC is eligible, please share,

AI Summary

Debate on Input Tax Credit Eligibility for Electric Transformers Under GST Section 17(5) Sparks Varied Opinions A client installed an electric transformer to supply electricity to its factory, involving cement poles, electrical wiring, and contractor services. The query was whether Input Tax Credit (ITC) is permissible under GST section 17(5). Responses varied: some argued the transformer is not part of a building and thus ITC is not blocked, while others emphasized its role in business operations, suggesting ITC should be available. References to legal precedents and the definition of 'plant and machinery' were discussed, indicating the issue's complexity and potential for contention.