Order Date – 12 May 2023 

Facts –  

• The Applicant, Colourband Dyestuff P Ltd, is engaged in the activity of manufacturing of dyes. The applicant procures intermediate as raw material in crude form which is chemically processed & through HAG machineries i.e. Hot Air Generation, Liquid raw material is being converted into powder form which is known as dyes re finished product which is applied to textile products. 
• The applicant intends to set up the factory at one premise using both the plots & have started setting up of the new factory. 
• For manufacturing dyes, they require various plant and machinery ['P&M'], primary being Sand Mill and spray dyer and HAG machine. These machines are required to be fixed on earth by foundation or various structural supports which are of MS steel/foundation structure. 
• The applicant in his application has fairly admitted that the ITC on works contract utilized in Administration building and Warehouse would be treated as blocked credit. 

Issue –  

• Whether the applicant can avail ITC on works contract service & material procured and utilized towards foundation for setting up of the machineries? 

Order –  

• The AAR observed that the law is unambiguous as far as ITC is concerned in respect of the P&M. ITC is not available in respect of works contract services when supplied for construction of an immovable properly. Further, ITC is not available for goods, services or both received for construction of immovable property even when used in the course or furtherance of business. 
• In respect of claim of ITC on the foundation and structural support for the Sand mill & Spray dryer it was found from the photographs that the structure/shed would clearly fall within the ambit of civil structure and stands excluded from the expression 'plant and machinery'. Hence, the ITC in respect of this structure/shed is blocked in terms of section l7(5) of the CGST,2017. 
• The photograph clearly depicts that there is a roof overhead the machine. This roof and its supports would clearly fall within the ambit of civil structure and stands excluded from the expression 'plant and machinery'. Hence, the ITC in respect of this structure/shed [ie roof and its supports] is blocked in terms of section 17(5) of the CGST,20l7.
• The expression 'plant and machinery' excludes civil structure. Therefore, when the ETP itself has been held to be a civil structure, the question of allowing ITC in respect of its foundation and structural support does not arise.
• Following the ratio of the ruling in the case of Tarun Realtors Pvt. Ltd. [2020 (35) GSTL 438(App. AAR-GST-Kar)1, it was held that the applicant is not eligible for ITC on works contract services taken for making foundation structure on which DG set is fixed to earth by foundation.