TaxTMI 
TaxTMI 
2026 (1) TMI 1053
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....ability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) on the Appellant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the Appellant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make i....
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....f their defence, viz., 3.1 The Appellant had entered into an agreement for erection of electrical works for new factory (hereinafter referred to as 'Contract') with M/s. SMCC Construction India Limited. The original Contract sum is INR 24,15,00,000/- (exclusive of GST). The Contract is attached and broadly classified into six categories as given below: S.No. Particulars Amount (exclusive of GST) Remarks 1 LT Panels 3,93,11,861 Design, supply and installation of LT switchgear panels 2 Busduct 3,91,85,553 Design, supply and installation of Aluminium busduct 3 LT Electrical Works 11,09,38,208 Supply and installation of MCB distribution boards, power receptacles, circuit mains & points, cable trays, earth electrodes and etc. 4 Lightning Protection Works 87,95,062 Supply and installation of external lightning protection system 5 Light fixtures 1,73,21,086 Supply, installation, testing and commissioning of complete light fixtures 6 Civil Works 62,83,369 Associated miscellaneous civil works excavation & back filling and laying heavy duty pipes 3.2 The images of the above-said works have been attached....
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....in Section 16(2) of CGST Act such as possession of tax invoice, receipt of goods/services/both, payment to supplier, etc. 3.6 Since, the eligibility and the conditions for taking input tax credit is established in the aforesaid paragraphs, the Appellant wishes to provide its interpretation on how the said credit is not blocked under the provisions of GST law. Section 17(5) of CGST Act & TNGST Act provides the cases where ITC is inadmissible. Relevant text of Section 17(5) was reproduced as below for reference: "(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles for transportation of persons ...... ...... ...... (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 ....
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....nels, busducts are placed on the overhead racks and are not rooted in the ground/ floor rendering it immovable or not possible to be maintained. That in the instant case, all the electrical components and apparatus supplied vide the Contract are movable, customizable to add more equipment and maintainable in case of any repairs. Accordingly, the Appellant submits this Contract for erection of these electrical components does not fall under the ambit of immovable property as mentioned in Section 17(5)(c) and (d) of the CGST Act. Thereby, the Appellant states that they are eligible to ITC on supply of all electrical apparatus/works covered under this Contract. 3.9 Under this context, the Appellant has brought to note that the AAR interpreted the phrase "deliver the permanent work to the owner" in the Contract as indicative of immovable property. However, the AAR overlooked that the Contract supplements a main Contract that pertains to the construction of an entire factory building. In general usage, "permanent work" typically refers to civil structures that are inherently immovable, such as the factory building itself. The elements covered under this Contract such as bus ducts, li....
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.... 2. any complex instrument or machine for a particular purpose. 3. any system or systematic organization of activities, functions, processes, etc., directed toward a specific goal; the apparatus of government; espionage apparatus. 4. Physiology, a group of structurally different organs working together in the performance of a particular function: the digestive apparatus" Accordingly, a group of instruments, tools, materials etc., having a particular function or intended for a specific use at the Plant. Therefore, the electrical works rightly gets covered under the definition of plant and machinery. 3.14 In addition to the above contentions, the Appellant also stated that the Contract would cover a meagre portion of civil works which are related to the installation and commissioning of electrical works as mentioned in the table annexed to this application. The said civil work includes the scope of excavation & back filling and laying out heavy duty pipes in the factory premises to assist the operations of plant and machinery deployed. This would qualify as foundation and structural support to the apparatus and equipment; hence ITC would be eligible on the s....
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....he busducts have been laid above ground level and not underground, which further supports their classification as eligible to ITC. 3.18 The Appellant has referred to the ruling of Authority for Advance Ruling, Maharashtra in the case of M/s. Nipro India Corporation Private Limited [2018 (10) TMI 745], wherein, it has been held that ITC on all the electrical related works of its extension project is eligible to be availed except for civil works. Seeking inference from the above ruling and in comparison, with the Contract, the current supply under question covers the sub-station electrical works, lighting system works and lightning protection system, and accordingly, the Appellant has stated that ITC shall be eligible on the same. 3.19 The Appellant also places its reliance on the very recent ruling of Authority for Advance Ruling, Gujarat in the case of M/s. Elixir Industries Private Limited [2024 (7) TMI 982], wherein, it has been held that ITC with respect to installation of electrical cable/wires. Extract of relevant ruling was re-produced as below for ease of reference. "The Appellant's averment is that they are not hit by 17(5)(c), ibid. The Appellant further sta....
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....w. Aggrieved, the Revenue filed a SLP before the Hon'ble Supreme Court which upheld the decision of the High Court, dismissing the appeal, thereby providing clarity to the matter. 3.21 The Appellant also draws attention to a recent ruling issued by the Gujarat Appellate Authority for Advance Ruling concerning the eligibility of ITC on construction-related items, which bears direct relevance to the present appeal. In the case involving M/s. KEI Industries Limited, while the Gujarat AAR accepted that the VCV (Vertical Continuous Vulcanisation) manufacturing line qualifies as plant and machinery, the initial ruling denied ITC on the concrete tower, deeming it an immovable civil structure constructed on the company's own account and thus excluded under Section 17(5)(c) and (d) of the CGST Act. Disagreeing with this interpretation, the company appealed to the Gujarat AAAR, which held that the concrete tower being the foundation and structural support for the VCV line also qualifies as part of plant and machinery, and allowed ITC on the inputs and services used in constructing the tower, stating that such inputs are not barred by the ITC restrictions under the cited provisions. 3.2....
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....tion involved in the instant case is detachable and movable, and therefore they are of the opinion that except for the civil portion of the work, ITC is available on the installation of such items. In the end, the AR stated that there is nothing more to add. 4.4 Under the additional submissions filed during the personal hearing, apart from reiterating the grounds already made out, the Appellant stressed on the following points, viz., (i) The Appellant has referred to the procurements made through the Contract of electrical installations, which are widely movable in nature, and that the necessary images of the same have been attached in Page 105 of Form GST ARA-02. (ii) Even in an alternate course of stand, the procurements made vide the Contract would be qualified as "Plant and Machinery" for the purposes of GST, thus being an eligible supply for availing ITC. (iii) As per the definition of "plant and machinery", any apparatus and equipment which may be fixed to earth for the purpose of making outward supply of goods qualifies to be a plant and machinery. Accordingly, the same would carve out from the immovable property. (iv) The AAR in its ru....
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....ion, whereby it becomes imperative that all State authorities interpret and apply the provisions of GST Law uniformly, without any deviation, so as to ensure consistency and eliminate interpretational ambiguities. (ix) The Appellant refers to the provisions of ITC under GST, which are in beneficial nature to the taxpayers. It is a well settled principle of law, that when an ambiguity arises in law, benefit must necessarily go in favour of subject/assessee other than for the exemption notification, as held by the Hon'ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs M/s. Dilip Kumar and Company & Ors. [2018 (7) TMI 1826]. 5. Discussions and Findings 5.1 We have carefully examined the submissions made by the Appellant in their appeal for advance ruling application and the submissions made during the personal hearing. We have also considered the issue involved, the relevant facts and the Appellant's submission / interpretation of law in respect of the questions on which the advance ruling is sought. 5.2 From the facts of the case, we note that the Appellant is engaged in the manufacture of injection moulding machinery and accessories. Since....
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....y, because without power, such functionality cannot happen. The AR added that the bus-ducts involved in the instant case are placed above the ground and not kept underground, and that the CBIC Circular No.219 issued in the year 2024, clarifies that ITC on such items is not barred. In fine, the AR stated that the electrical installation involved in the instant case is detachable and movable, and therefore they are of the opinion that the erection of these electrical component does not fall under the ambit of immovable property as mentioned in Section 17(5)(c) and (d) of the CGST Act, whereby the ITC on the installation of such items is available to the Appellant. 5.5 From the aforesaid contentions of the appellant, we come to understand that the appellant most specifically emphasises the following aspects, viz., (i) that the electrical installations having a particular function or intended for a specific use at the Plant, is to be considered as an 'Apparatus', whereby the electrical installation work gets covered under the definition of Plant and Machinery'. (ii) that the electrical installations are movable in nature, whereby it falls outside the ambit of 'immo....
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....availment on receipt of Works Contract service, or on receipt of any goods or service or both, when made for 'construction of an immovable property'. 5.8 Further, the expression "plant and machinery" as defined in the explanation under Section 17 of the CGST Act, 2017, is extracted as below:- 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. Whereby it becomes clear that the expression 'plant and machinery' talks about an apparatus, equipment and machinery fixed to earth, either by foundation or by structural support, where we observe that the crucial aspect of the said definition is "used for making outward supply of goods of services or both". 5.9 However, it could be seen from the provisions of section 17(5)(c) of the Act....
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.... explanation under Section 17 of the CGST Act, 2017, is taken to mean an - (a) apparatus, equipment or a machinery; (b) which are fixed to earth either by foundation or by structural support; (c) which are used for making outward supply of goods or services or both; It could be seen that the electrical installation as discussed in the instant case involving the supply and installation of LT Panels, Busducts, LT Electrical Works, Lightning Protection Works, Light fixtures, its associated civil works, etc., cannot be considered as an 'equipment' or a 'machinery' by any means whatsoever. Therefore, the only option before us is to explore whether the same falls within the category of 'Apparatus', or not. Admittedly, the Appellant is of the opinion that the same gets categorized as an 'Apparatus' and has drawn inference for the term 'Apparatus' from Webster's Encyclopedic Unabridged Dictionary of the English Language which reads as under: "a group or aggregate of instruments, machinery, tools, materials etc., having a particular function or intended for a specific use. 2. any complex instrument or machine for a particular purpose. ....
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....on do not qualify as an 'Apparatus' and once it is ruled out that they do not get categorized either as a 'Machinery' or as an 'Equipment' as well, it is evident that such electrical installation work do not get covered within the ambit of "Plant and Machinery". 5.13 At this juncture, we take note of the Appellant's contention that the AAR has interpreted the phrase "used for making outward supply of goods or services or both" without emphasizing the requirement of direct usage; that this nuanced yet significant distinction appears to have been insufficiently considered in the assessment; that the Electrical installations are not merely supportive in nature; rather, they constitute essential and mandatory infrastructure required to ensure uninterrupted operations of the plant and machinery installed at the factory premises; That these installations directly facilitate the functioning of plant and machinery, thereby forming an integral part of the process of making outward supplies. In this regard, we bring to note that once it is clear that the electrical installation do not get covered under the expression "plant and machinery", the question of ascertaining the aspect as to whe....
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....it cannot be removed or relocated without causing damage to it, it is an indication that it is immovable. (2) Object of annexation: If the attachment is for the permanent beneficial enjoyment of the land, the property is to be classified as immovable. Conversely, if the attachment is merely to facilitate the use of the item itself, it is to be treated as movable, even if the attachment is to an immovable property. (3) Intendment of the parties: The intention behind the attachment, whether express or implied, can be determinative of the nature of the property. If the parties intend that the property in issue is for permanent addition to the immovable property, it will be treated as immovable. If the attachment is not meant to be permanent, it indicates that it is movable. (4) Functionality Test: If the article is fixed to the ground to enhance the operational efficacy of the article and for making it stable and wobble free, it is an indication that such fixation is for the benefit of the article, such the property is movable. (5) Permanency Test: If the property can be dismantled and relocated without any damage, the attachment cannot be said to b....
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.... addition to the immovable property, it will be treated as immovable. In view of the detailed discussions in para 5.16 above, and in view of the fact that a clause in the contract itself, specifies the permanent and immovable nature of the executed project, we are of the opinion that the said electrical installation is part of the immovable property. 5.18 Further, we find that the 'Marketability Test' (clause 6), assumes immense significance in the context of the instant case. We observe that none of the component of the electrical installation work, viz., LT Panels, Bus-ducts, LT Electrical works, Lightning Protection System, Light Fixtures and its associated civil work, as seen from the 'Cost Abstract' of the Contract as furnished above, are capable of being marketed as such, as they are tailor-made to suit the needs of a particular factory/facility, and that they are not capable of being operated independently on their own as a stand-alone product as in the case of an air-conditioner, or any other machinery. In this connection, we note that the AAR in para 7.8.3 of its original ruling dated 18.08.2025, had observed inter-alia as follows:- "-------.In this regard, we ....
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....ed in network of Optical Fibre Cables (OFCs) for providing telecommunication services. It has also been explained in the aforesaid Circular as follows :- "The OFC network is generally laid with the use of PVC ducts/ sheaths in which OFCs are housed and service/ connectivity manholes, which serve as nodes of the network, and are necessary for not only laying of optical fiber cable but also their upkeep and maintenance. In view of the Explanation in Section 17 of the CGST Act, it appears that ducts and manholes are covered under the definition of "plant and machinery" as they are used as part of the OFC network for making outward supply of transmission of telecommunication signals from one point to another." As could be seen from the above, the facts of the case as discussed in the Circular differ in as much as the outward service in this case relates to 'telecommunication services', whereby the purpose behind the laying of ducts and manholes is to serve as nodes of the network and that they are used as part of the OFC network, which in turn is directly related to the said outward service. Accordingly, the clarification/contents of the aforesaid Circular are not applicabl....
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....n items have been ruled as eligible and others as ineligible, and accordingly becomes distinguishable. Further in this regard, we find that the ruling pronounced later by a higher forum, i.e., the Appellate Order dated 04.10.2023 of the Gujarat Appellate Authority for Advance Ruling in the case of M/s. The Varachha Co-op Bank Ltd., have categorically ruled that ITC in relation to electrical fittings/works is ineligible. Accordingly, the aforesaid rulings cited by the Appellant do not apply to the instant case and is of no avail to them. 5.22 The Appellant has placed reliance on the judgment by the Hon'ble Supreme Court of India that impacts the eligibility of ITC under the GST regime, on the telecommunication towers. In the case of SLP filed by Revenue vide "Commissioner, CGST Appeal-I, Delhi Vs M/s. Bharti Airtel Limited" [2025-VIL-62-SC], the Hon'ble Supreme Court has conclusively ruled on the classification of telecommunication towers. The Appellant states that the Hon'ble Delhi High Court has held that telecommunication towers are not immovable property, and when the Revenue filed a SLP before the Hon'ble Supreme Court, it upheld the decision of the High Court, thereby pr....
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....t ITC is available under the KVAT, 2003, on the purchase of electrical goods. (b) The Hon'ble Madras High Court (in the context of Income Tax) in the case of Geetha Hotels (P) Ltd., Vs Commissioner of Income Tax [2001 (9) TMI 58] has held that electrical installations and sanitary fittings which by themselves are "plant" for the purpose of depreciation in the scheme of section 32, cannot be regarded as "building" when such fittings are fitted to the building. (c) While negating the intent of other Advance Rulings by TN AAR, the Authority has relied upon the rulings of Gujarat AAAR in the case of M/s. Varachha Co-op Bank Limited (Service Sector) and the Karnataka AAR in the case of M/s. Embassy Industrial Parks Limited (Leasing constructed spaces), and the Authority has incorrectly interpreted the aforementioned rulings. Conversely, the Appellant's core business involves manufacture of injection moulding machinery, whereby the underlying intent behind the procurement has been disregarded by the Authority. In this regard, it is to be stated that any reference made in respect of any other legal enactment like the KVAT, Income Tax Act, etc., do not merit considerat....