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

Input tax credit on plant and machinery: transformers and their supports may qualify for ITC if they meet P&M criteria.
Availability of input tax credit on a transformer and its associated poles, wiring and civil fittings turns on whether those items qualify as plant and machinery under the GST explanation-i.e., apparatus fixed to earth by foundation or structural support, with such foundations included-versus being excluded as building or other civil structures; eligibility also depends on factual factors and contractual characterisation and remains a contentious, fact-specific question.