TaxTMI 
TaxTMI 
2026 (2) TMI 1064
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....by M/s CPL Pharmaceuticals Private Limited, Cadila Corporate Campus, Sarkhej Dholka Road-Bhat, Ahmedabad-382210, GUJARAT (hereinafter "the applicant") is fit to pronounce advance ruling as they have deposited prescribed Fee under CGST Act and it falls under the ambit of the Section 97(2) given as under: (d) admissibility of input tax credit of tax paid or deemed to have been paid A. SUBMISSION OF THE APPLICANT (in brief) :- Brief facts of the case: 1. M/s CPL Pharmaceuticals Private Limited (hereinafter referred to as "the Applicant") is a private limited company, inter alia, engaged in the manufacture and supply of Active Pharmaceutical Ingredients ("APIs"), finished formulations, food supplements, biotechnology products, pharmaceutical machinery etc. 2. The Applicant is setting up a new plant at RIICO, Udaipur, Rajasthan for manufacturing lyophilized injectable drugs. In order to carry out the construction work of the lyophilized injectable plant (hereinafter referred to as "plant" or "factory") in RIICO - Kaladawas Extension (Phase II) Udaipur, Rajasthan, the Applicant has issued a Purchase Order dated 14.02.2023 (hereinafter referred to as "PO") to Sribal Constru....
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....ozen mass changes into a cake-like structure. Due to the loss of latent heat during sublimation, heat must be continuously applied to the product throughout primary drying. iv. Secondary Drying: This is the last stage of freeze-drying, in which water that did not freeze is removed by the process of desorption from the solute phase. The objective of secondary drying is to reduce the unbound water (moisture) to a level that is optimal for the stability (less than 1%) of the final product. The shelf temperature in secondary drying is kept much higher than that used for primary drying so that desorption of water may occur at a practical rate. This process is also known as 'Isothermal Desorption'. 6. The Applicant submits that manufacturing of lyophilized injectable drugs involves a highly controlled and regulated process to ensure quality, efficacy and safety. Thus, the following equipment will be installed within the plant for manufacturing lyophilized injectable drugs: • Lyophilizer: This equipment, also known as a freeze dryer, is a device used to remove water from materials through a process called lyophilization or freeze-drying. • Vial Filling Line....
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....ogical factors. The foundation including RCC flooring works were executed using systematic layering of construction materials to ensure structural integrity, durability, and load-bearing capacity. 9. The Applicant further submits that the aforementioned equipment which are essential for manufacturing lyophilized injectable drugs are required to be installed on a Reinforced Cement Concrete ("RCC") foundation coupled with steel structural support. This robust foundation is critical to ensure the inherent stability and strength required for these precision machines and equipment during operation. Such construction is being done while adhering to standards outlined in IS 456:2000 (Code of practice for plain and reinforced concrete) and IS 800: 2007 (General construction in steel - Code of Practice). Furthermore, these foundations for the machinery and equipment are constructed in compliance with IS 2974 (Code of practice for design and construction of machine foundations). 10. The Applicant submits these machines, and equipment cannot be placed directly on the land or its surface without adequate structures to support them. Given the operational load, torque, and vibrations gener....
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.... rocks including breaking, removal, stacking etc. The breaking of soft and hard rock along with use of excavated hard rock for soling purposes is paramount for equipment installation in the plant. The work ensures that the heavy equipment, which generates significant static and dynamic loads (e.g. vibrations, impacts), is seated on uniform base and prevents sinking of the entire structure, controls vibrations and maintains critical machine alignment. Therefore, the above works have been undertaken to construct a robust and stable foundation specifically designed to support the heavy equipment installed within the factory premises and ultimately transfer these loads to the ground. 3. Excavation by Chiseling in hard rock Hard rock is chiseled to construct a stable foundation, crucial for installing equipment within the plant. 4 Backfilling of excavated materials The backfilling of murum is critical for preparing the plant's plinth below the concrete and for various RCC structures. This process is directly relevant to equipment installation as it establishes a uniformly stable and unyielding base across the entire plant, crucial for supporting the often massive....
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....recting & fixing mild steel or TOR steel reinforcement. In RCC structures, reinforcement is used in combination with concrete to achieve high strength and durability. While concrete is excellent in resisting compressive forces, it is relatively weak in tension. To overcome this limitation, steel reinforcement, most commonly TOR steel (Twisted Oval Reinforcement) is embedded within the concrete. TOR steel, known for its high tensile strength and ribbed surface, provides superior bonding with concrete and effectively handles tensile stresses. This synergy between concrete and steel ensures that RCC structures can withstand various loads and stresses. 12. Providing, fabricating, fixing and embedding in position M.S. Plate or structural inserts in concrete or masonry (like corner angles etc.) Embedding MS plates, angles, channels, and other steel components within concrete is essential for facilitating future structural work such as pipe racks and steel frameworks in RCC structures. This ensures the accurate alignment of equipment and efficient load transfer. 13. Supplying, Straightening, transporting, fabricating, erecting, structural steel work at all levels includi....
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....f machine, there is IS code for design of machine foundation. If there is no foundation or support for machines, it may damage floor or adjacent structure, there may chances of machine overturning and disturb in positioning." (emphasis supplied) A copy of the plant inspection report dated 21.01.2025 (without annexures) issued by the chartered engineer is marked and annexed as Annexure - 2. 13. The Applicant has availed the input tax credit ("ITC") of tax paid on the purchase of the above-mentioned equipment installed within the factory premises of the lyophilized injectables plant, which are used for manufacturing the lyophilized injectable drugs, as the same is eligible to the Applicant in terms of Section 16 and Section 17 of the Central Goods & Service Tax Act, 2017 (hereinafter referred to as "CGST Act"). 14. The Applicant states that the supplier viz. Sribal Construction Company has issued tax invoices to the Applicant from time to time to recover the consideration for the construction of the foundation works in relation to the installation of equipment within the factory premises and has discharged the tax at the rate of 18% by adopting the SAC 9954....
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....ed on any supply of goods or services or both by him which are used or intended to be used in the course or furtherance of his business and said amount will be credited to the electronic credit ledger of such person. 3. The Applicant submits that the lyophilized injectables plant is to be used for manufacturing lyophilized injectables which will be supplied by the Applicant to its customers. Thus, the input services procured by the Applicant for construction of foundation and structural support for various equipment at the factory of the Applicant is in the course or furtherance of business of the Applicant. 4. Thus, it is submitted that the Applicant is eligible to avail the ITC on input services received for construction of foundation and structural support for installing the equipment within the factory premises of the Applicant in terms of Section 16 of the CGST Act. • The input services procured by the Applicant are used for foundation and structural support of the equipment installed for manufacturing lyophilized injectable drugs, which are "plant and machinery' in terms of Explanation to Section 17 of the CGST Act. 5. Section 17(5) provides ....
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.... or other equipment used for a particular purpose. 13. As per the Merriam Webster Dictionary, "apparatus" is defined as a set of materials or equipment designed for a particular use. 14. Webster's Encyclopaedic Unabridged Dictionary of English language defines 'apparatus' as: a. A group or aggregate of instruments, machinery, tools, materials etc., having a particular function or intended for a specific use. b. Any complex instrument or machine for a particular purpose. c. Any system or systematic organization of activities, functions, processes, etc., directed toward a specific goal. Meaning of the term 'machinery': 15. The Concise Oxford Dictionary defines the terms 'Machine' and 'Machinery' as • Machine a) An apparatus using or applying mechanical power and having several parts, b) Each with a definite function and together performing a particular task. Any device that transmits a force or directs its application • Machinery a) Machines collectively or components of a machinery • Therefore, the term 'machinery' signifies an assembly of items designed to perform a mechanical f....
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....e a plant. Lord Reid considered the part which a dry dock played in the assessee company's operations and observed: "It seems to me that every part of this dry dock plays an essential part .... The whole of the dock is, I think, the means by which, or plant with which, the operation is performed." • Lord Guest indicated a functional test in these words: "In order to decide whether a particular subject is an 'apparatus' it seems obvious that an enquiry has to be made as to what operation it performs. The functional test is, therefore, essential at any rate as a preliminary". • Further, reference may be made to the scope of the term "machinery" as discussed in the case of Ambica Wood Works v. The State of Gujarat 1979 43 STC 338 (Guj). The Gujarat High Court analyzed the scope of machinery by looking into the dictionary meaning in Webster's New Twentieth Century Dictionary, Unabridged, Second Edition. From the dictionary meanings, the following understanding was taken by the Court: "9. In other words, if there is a combination of things, the harmonious working of which results in a desired end, that collection of things would be kn....
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.... be examined on the parameters of the tests referred to in para 4.25 above. • Common parlance test - In common parlance, all the equipment installed in the lyophilized injectable plant viz. lyophilizer, vial filing line, autoclave, inspection machine, leak test machine, mfg. skids, CIP skid, part washer, vial labelling, cartonator, track and trace and check weighing etc. can be understood as 'apparatus' or 'equipment'. • Functional test - All these equipment has a well-defined function to manufacture lyophilized injectable drugs. • Durability test - The above-mentioned equipment is expected to last for several years and hence it also satisfies this test. • Close Nexus test - The various equipment has a close nexus with the manufacturing of the lyophilized injectable drugs in as much as all these equipment is a sine qua non for setting up the lyophilized injectable plant and without these equipments, the Applicant will not be able to manufacture their end products viz. lyophilized injectable drugs. • Thus, in light of the above, it is submitted that all the equipment installed within the factory premises for manufactur....
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.... respect of such ducts and manhole used in network of optical fibre cables (OFCs), either under clause (c) or under clause (d) of sub-section (5) of section 17 of CGST Act. • As per the above circular, ducts and manholes used in the network of OFCs are falling within the scope of 'plant and machinery' in terms of Explanation to Section 17 of the CGST Act, 2017. The Applicant submits that placing reliance on this circular, an inference can be drawn that since various equipment installed within the factory premises are essential and necessary for manufacturing the lyophilized injectable drugs, accordingly, the equipment installed for the said purpose will be covered under the definition of 'plant & machinery' as they will be integral part used for making outward supply. • Further, as per the circular, ducts and manholes are not specifically excluded from the definition of 'plant and machinery' in the Explanation to Section 17 of the CGST Act, 2017 as they are neither in nature of land, building or civil structures nor are in nature of telecommunication towers or pipelines laid outside the factory premises. • The Applicant submits that in the pre....
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.... be part of the plant and machinery in accordance with the Explanation under Section 17 of the CGST Act. • Therefore, let us examine as to what would be covered under the term 'foundation and structural support'. • The term "foundation" has not been defined in the CGST Act. Therefore, reference can be made to S.B. Sarkar's, Words and Phrases of Excise, Customs & Service Tax, 4th Edition (2006), CENTAX Publications Pvt. Ltd., which defines "foundation" as: "inter alia means the lowest load bearing part of the building, typically below ground level; A construction below the ground level that distributes the load of a building, wall etc. (The New Collins) - Solid ground or base, natural or artificial, on which building rests, lowest part of the building usually below ground-level" (emphasis supplied) • In this context, reference can also be placed upon the decision of Hon'ble Karnataka High Court in the case of JK Cement Works vs. State of Karnataka reported at (2017) 7 GSTL 408 (Kar.), wherein it has been held that the plant and machinery for manufacturing of cement by itself would be nothing and would be useless, unless they are pro....
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...., carting away, soling, murum filling, concrete works, trimix cement concrete flooring, formwork and shuttering, and TOR steel reinforcement as detailed in para 2.9 (supra) have been executed considering the machine loads, dynamic forces, torque and vibrations generated by the plant and machinery installed within the factory premises. These specialized foundation works are critical to ensuring structural integrity, preventing subsidence and enabling the foundation to effectively absorb operational loads. • The Applicant submits that since the equipment installed for the production of lyophilized injectable drugs qualifies as 'plant and machinery' in terms of Explanation to Section 17 of the CGST Act and thus, the various foundational works detailed in para 2.9 (supra) is in the nature of 'foundation and structural support' for these equipment. • The Applicant further submits that in addition to the above foundation works, SCC has also undertaken the construction of pipe racks and steel frameworks. The structural steel works have been performed for the pipelines which are installed within the factory premises for the transportation of raw water, drinking wa....
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....ete structure in the form of VCV tower serves as a critical foundation and support system for the manufacturing process; that it provides stable base for tower components; that it absorbs vibrations & ensures accurate positioning of extruder, cross head and other elements. Given these facts, we find that plant and machinery in terms of the second explanation, placed beneath section 17, ibid, specifically includes foundation and structural support. The exclusions from plant and machinery are also listed viz (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Further, 'other civil structures' means civil structures other than foundation and structural support to plant and machinery. 17. Thus, the moment it is held that the ITC sought is on construction of foundation and structural support relating to plant and machinery, it moves out of the ambit of section 17(5)(c) and (d) even if it is on their own account. This being the case, we find that the applicant is eligible for availing the ITC on inputs and input services used for construction of concrete tower to suppor....
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..../428 dated 19.09.2025 are as under: Comments on Application of Advance Ruling of Firm M/s CPL Pharmaceuticals Private Limited (hereinafter referred to as "the Applicant") is a private limited company, inter alia, engaged in the manufacture and supply of Active Pharmaceutical Ingredients ("APIS"), finished formulations, food supplements, biotechnology products, pharmaceutical machinery etc. The Applicant is setting up a new plant at RIICO, Udaipur, Rajasthan for manufacturing lyophilized injectable drugs. The Applicant submits that given the plant's location within a mountain region, the foundational works have been undertaken with due consideration for the inherent topographical and geological factors. The foundation including RCC flooring works were executed using systematic layering of construction materials to ensure structural integrity, durability, and load-bearing capacity. The applicant submit following Submission 1. Excavation in soil for foundations including trenches. pavements, manholes, wall footings, pipelines pits, tanks ete. including shoring, dewatering Comments- All above process mentioned by applicant are relat....
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.... pack the soling as required. Dealer used all process which are related to construction of immovable structure / premises. So applicant is not eligible to avail ITC on above Point 7. Murum Filling in plinth & flooring including sand filling.- Comments - Murum filling in a plinth involves the layer-by-layer compaction of a granular soil material called murrum (a mixture of gravel, rock particles, and minerals) to create a stable base for a building's floor. Which is clearly construction of immovable structure, area of machine set up also not mentioned. So applicant is not eligible to avail ITC on above Point 8. Concrete Work and other RCC works. - Comments - Process used to strengthen base/ plinth again part of works of construction. So applicant is not eligible to avail ITC on above Point 9. Trimix Cement Concrete Flooring - Comments - All above process mentioned by applicant are related to process of construction of a building immovable property So applicant is not eligible to avail ITC on above Point 10. Formwork and Shuttering- Comments - Formwork and shuttering are moulds or struc....
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....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. The Applicant states that the supplier viz. Sribal Construction Company has issued tax invoices to the Applicant from time to time to recover the consideration for the construction of the foundation works in relation to the installation of equipment within the factory premises and has discharged the tax at the rate of 18% by adopting the SAC 995413 having description "Construction services of industrial buildings such as buildings used for production activities (used for assembly line activities), workshops, storage buildings and other similar industrial buildings". Applicant itself declared that Sribal Construction Company having description "Construction services of industrial buildings such as buildings used for production activities. It is very clear that the Bills are related to construction of Imoveable property. Final Comments- In the Light of above points ITC received from Sribal Construction Company is also part of works contract. So applicant is not eligible to avail ITC on all poin....
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....chinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services 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." 5.1 On a plain reading of the Explanation to Section 17, it is clear that the definition of "plant and machinery" is inclusive, and it explicitly includes the "foundation and structural supports" used to fix the equipment to the earth, provided they are used for making outward supply of goods or services but excludes land, building any other civil structure, telecommunication towers and pipelines laid outside the factory premises. 5.2 Further, for the purpose of section 17(5)(C), the expression "Construction", which is capitalized to the said immovable property will only be eligible for taking ITC. 6. The applicant submitted details of time of supply and ledger copy of M/s Sribal construction company but no document regarding details of date of eligibility of ITC, payment made, whether ....