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SGST Advance Ruling Authority

GST – Kerala AAR - Input Tax Credit on construction of a Fresh Water Storage Tank and Effluent Storage Tank, Plant and Machinery or Civil Structure – Whether the applicant is entitled to avail Input Tax Credit on the GST paid on goods and services used for construction of the Fresh Water Storage Tank – HELD – The fresh water tank, though constructed using civil work elements, serves an essential and dedicated production-related function, and is not a mere civil structure but an integral part of the plant and machinery. Applying the "functionality test" laid down by the Supreme Court in M/s Safari Retreats case, it is held that the tank falls within the definition of "plant and machinery" under the GST law, and therefore the restriction on ITC for construction of immovable property under Section 17(5)(c) and (d) of the CGST Act, 2017 does not apply – The applicant is entitled to avail ITC on goods and services used for construction of the Fresh Water Storage Tank, subject to its capitalization as plant and machinery and use in the manufacturing process – Ordered accordingly - Whether the applicant is entitled to ITC on construction of the 'Guard Pond' (Effluent Storage Tank) – HELD - The Authority applied the same reasoning as in the case of the fresh water tank, concluding that the guard pond, being an essential component of the effluent treatment infrastructure crucial for continuous production, qualifies as "plant and machinery" and not a mere civil structure. Therefore, the restriction on ITC under Section 17(5)(c) and (d) does not apply – The applicant is entitled to ITC on goods and services used for construction of the 'Guard Pond' (Effluent Storage Tank), subject to its capitalization as plant and machinery and its integral use in the manufacturing process.
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