The Gujarat Appellate Authority of Advance Ruling (AAAR) has rejected the GST department’s appeal and held that the Input Tax Credit (ITC) is admissible on wires/cables electrical equipment etc. installed outside factory premises.
The bench of Sunil Kumar Mall and Rajeev Topno has observed that when Board has clarified that ITC is not restricted even in respect of ducts and manhole used in OFCs under section 17(5) of the CGST Act, 2017, the question of restricting the ITC on capital goods in the form of wires/cables electrical equipment etc. [viz 750 meters new 66 KV S/Cable (3+1), 630 mm square aluminium corrugated sheath/G cable line for installation of 66 KV feeder bay at sub-station of GETCO] used for transmission of electricity from power station of the DISCOM to the factory premises of the applicant, simply does not arise.
The respondent, M/s Elixir Industries is a 100% EOU, engaged in the manufacture of hydro entangled (spun lace) non-woven products. For its electricity/HT power connection, they require a 1000 KVA power demand on 66 KV system voltage for which they need to install a 66 KV feeder bay at substation of GETCO’ under deposit scheme & also lay a 750 meters new 66 KV S/cable (3+1), 630 mm square aluminum corrugated sheath U/G cable line from 66 KV Palej substation of GETCO to their switchyard at their Palej factory.
The respondent sought the advance ruling on the issue whether or not a manufacturer is eligible to take ITC on the capital goods in the form of wires/cables electrical equipment etc. used for transmission of electricity from power station of the DISCOM to the factory premises of the registered person which are installed outside factory premises, as per rules and policy of GETCO, Government of Gujarat Electricity distribution company.
The AAR held that the applicant is eligible to take ITC on the capital goods in the form of wires/cables electrical equipment etc [viz 750 meters new 66 KV S/Cable (3+1), 630 mm square aluminium corrugated sheath/G cable line for installation of 66 KV feeder bay at sub-station of GETCO] used for transmission of electricity from power station of the DISCOM to the factory premises of the applicant.
The Assistant Commissioner, CGST and Central Excise has challenged the AAR ruling on the grounds that the installation of 66KV feeder bay is outside the factory & the ownership of which lies with GETCO, cannot be categorized as plant and machinery and is blocked under section 17(5) of the CGST Act, 2017. It is mentioned in the ruling that the goods will be transferred to GETCO & as a result ITC is liable to be reversed or paid back in terms of section 18(6), yet the ITC was allowed. The aspect of section 17(5) and 18(6) of the CGST Act, 2017 was not considered.
The AAR upheld the findings of the GAAR and stated that nothing is produced by the department, to compel interference with the ruling.
Ruling Details
Applicant’s Name: The Assistant Commissioner, CGST
Ruling Date: 22/09/2025
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