The Gujarat Authority for Advance Ruling (AAR) has issued a decision allowing M/s Alleima India Pvt. Ltd. to claim Input Tax Credit (ITC) on certain expenses related to their power connection infrastructure. The company, which operates a manufacturing facility in Mehsana, Gujarat, expanded its production capacity and needed a new high-tension power connection. To facilitate this, they installed a 2.7 km underground cable line from a Gujarat Energy Transmission Corporation (GETCO) substation to their premises, incurring costs of ₹5.73 crore for materials and installation.
The key issue was whether ITC could be claimed on capital goods and services used for laying the power cables and transmission lines situated outside the factory premises, as per the Central Goods and Services Tax (CGST) Act. The AAR concluded that ITC is indeed allowable for the procurement of cables, electrical equipment, and installation services, even though these are installed outside the factory. The ruling was based on the modular and movable nature of the cables and equipment, which do not classify them as "immovable property" under the relevant sections of the CGST Act.
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The AAR's decision was also supported by a CBIC circular which clarified that similar infrastructure, such as ducts and manholes in optical fiber networks, are considered part of "plant and machinery." This ruling allows the applicant to capitalize on the costs and claim depreciation, providing a financial advantage while ensuring compliance with GST regulations.
Authority: Gujarat Authority for Advance Ruling
Date of Order: 16 October 2025
Applicant: M/s Alleima India Pvt. Ltd.
Facts
- The applicant, engaged in manufacturing at its Mehsana, Gujarat facility, expanded its production capacity and required a new 66 KV high-tension power connection from GETCO.
- To establish this connection, the applicant laid a 2.7 km underground cable line from the GETCO substation to its switchyard, executed through an approved vendor under GETCO’s supervision.
- The applicant bore the full cost of materials and installation (₹5.73 crore), capitalized the same in its books, and claimed depreciation on the taxable value.
- The applicant sought an advance ruling to determine whether ITC could be availed on capital goods and related services (wires, cables, electric equipment, supervision and installation charges) used for this transmission line outside the factory premises.
Issue
- Whether ITC is available on procurement of capital goods and related services used for laying power cables and transmission lines outside the factory premises, as per Sections 16 and 17 of the CGST Act, 2017?
Order
- The AAR held that the applicant is eligible to claim ITC on procurement of cables, electrical equipment, and installation services used for transmission of electricity from the power station to the factory premises, even though installed outside the factory.
- The Authority reasoned that the cables, switchyards, and related equipment are movable and modular, capable of being dismantled and relocated. Hence, they do not qualify as “immovable property” under Section 17(5)(c) or (d).
- The AAR relied on CBIC Circular No. 219/13/2024-GST (dated 26.06.2024), which clarified that ducts and manholes used in optical fiber networks are part of “plant and machinery.” Accordingly, the underground cables here are similarly covered.
- Although the infrastructure was established under GETCO supervision and may vest ownership with GETCO
