The Gujarat Appellate Authority of Advance Ruling (AAR) has ruled that Input Tax Credit (ITC) can be availed on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the applicant for manufacture of EHV cable in terms of the explanation to section 17 (5Xd) of the CGST Act 2017.
The bench of Sunil Kumar Mall and Rajeev Topno while quashing the AAR’s ruling observed that when ITC is not restricted even in respect of ducts and manhole used in OFCs under section 17(5) of the CGST Act, 2017, the ITC, on inputs and input services used for construction of concrete tower to support and erect the VCV lines, for manufacture of EHV cables also, similarly, cannot be restricted.
The appellant is engaged in the manufacture & supply of extra high voltage [EHV], medium voltage [MV] and low voltage [LV] cables upto 400 KV. Presently, they manufacture EHV cable using the continuous catenary vulcanization [CCV] process. However, the appellant has collaborated with M/s. Brugg Kabel AG, a Swiss company, to upgrade its technology to manufacture EHV cables upto 400 KV by setting up a new manufacturing plant in Gujarat for manufacturing HV/EHV cables using the vertical continuous vulcanization [VCV] process.
The applicant sought the advance ruling on the issue whether the applicant is eligible to quail ITC on inputs and input services used for construction of concrete tower to support and erect the vcv lines at the factory of the applicant for manufacture of EHV cables in terms of Section 7 7(5)(c) and (d) of the CGST 2017?
The AAR held that the applicant is not eligible to avail ITC on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the applicant for manufacture of EHV cables n terms of Section I 7(5)(c) and (d) of the CGSTAcI 2017.
The applicant stated that consequent to the judgment of Safari Retreats, Legislature amended retrospectively. The term ‘plant & machinery’ defined in the explanation to section 17 is applicable to both its clauses (c) & (d); that the inward supplies provided by M/s. Suraj Buildcon are in the nature of works contract; that the inputs & input services procured by the appellant for construction of concrete tower to support & erect VCV lines at the factory of the appellant is in the course or furtherance of business.
The AAAR held that the ITC sought the construction of foundation and structural support relating to plant and machinery; it moved out of the ambit of section 17(5)(c) and (d) even if it was 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 support and erect the VCV lines at the factory of the appellant for manufacture of EHV cables.
Ruling Details
Applicant’s Name: KEI Industries Ltd.
Ruling Date: 25.06.2025
