2025-VIL-143-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR - Blocked Credit - Construction of factory, Input Tax Credit, Immovable Property, Works Contract, Plant and Machinery - Applicant constructed a new factory adjacent to its existing factory and incurred capital expenditure towards procurements for setting up the new factory. The applicant entered into a contract with M/s. SMCC Construction India Limited for "Supply, Installation, Testing and Commissioning of Electrical Works" for the new factory - Whether Input Tax Credit is eligible on electrical works carried out for expansion of factory for manufacturing activity - HELD - The agreement is not merely for installation/commissioning of electrical works but it is a composite one of Works Contract’ Service involving “Supply, Installation, Testing and Commissioning of Electrical Works” – The Electrical LT works proposed in the contract is for the ‘New Factory Project’ which is a comprehensive one meant for the entire factory, and not in relation to a specific machinery/equipment - The execution of the project amounts to rendition of a composite “Works Contract” Service, in as much as it involves supply of materials as well as supply of service including installation, testing, commissioning, etc. – Further, the electrical installation for the factory, results in a ‘Permanent Work’ of immovable nature and the same cannot be considered as ‘Plant and Machinery’ as defined under the CGST Act - the GST paid on the receipt of ‘Works Contract’ service involving electrical installations for the new factory project, is not eligible for availment of ITC as they are blocked under clause (c) of the Section 17(5) of the CGST Act, 2017 – Ordered accordingly
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