Installation of rain water storage pit

[S.C. WADHWA]

Dear Expert,

We are manufacturers of both taxable and exempted food items.

We have installed two pits for rain water storage purpose inside the factory under the requirement of Haryana ground water Act. My query is whether we will get input tax credit full or in proportionate. Pit will be capatalized in the books. Please give your expert opinion.

REGARDS,

WADHWA

[Padmanathan KV]

Since rain water storage pit is an immovable property (other than plant and machinery), it will be blocked under the following entry:

(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.

This is regardless of whether it is obligatory under any law or not as such exception is only applicable for sub-clauses up to (b).

Therefore in my opinion, no input tax credit may be available.

AI Summary

Input tax credit denial for rainwater storage pits as immovable property, blocking credit even if legally mandated. Input tax credit on goods and services used to construct rainwater storage pits is blocked because the pits are an immovable property (other than plant and machinery); this includes works contract services for such construction and goods or services received for construction on one's own account, and statutory obligation to install does not make the credit available.