GST Input Tax Credit for Specialized Factory Structures
The Gujarat Authority for Advance Ruling confirmed that specialized support structures for machinery qualify as plant and machinery, allowing input tax credit claims.
- Ruling
- ADVANCE RULING NO. GUJ/GAAR/R/2026/15, dated 08.05.2026
- Dated
- 08 May 2026
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Apar Industries asked if they could claim GST credit for a vulcanization tower.
- The tower supports machinery essential for manufacturing high-voltage cables.
- The authority ruled the tower is plant and machinery, not a building.
- Input tax credit is not blocked for this specialized structural support.
In short
The company asked if they could claim input tax credit (ITC) on the GST paid to build a specialized tower that houses manufacturing machinery. The tax authority had to decide if this tower was a building—where credit is usually blocked—or part of the machinery itself.
What has changed
How it worked before
Businesses often assumed that any structure built on-site was considered immovable property, meaning the GST paid on construction materials and services could not be claimed as a credit.
What has changed
The authority decided that because the tower is an essential part of the manufacturing process, it qualifies as plant and machinery. This means businesses can now claim input tax credit on the GST paid for such specialized structures, provided they are functionally necessary for production.
Who this affects
Manufacturers who build specialized vertical structures or support frames to house heavy production machinery.
An example
A textile mill builds a specialized steel frame to hold heavy weaving looms in place. They wonder if they can claim the GST paid on the steel and labor. Based on this ruling, if they can prove the frame is a functional part of the machinery rather than just a building support, they may be eligible to claim the input tax credit.
What you should do
If you are building similar structures, document how they are essential to your machinery's operation. Remember that an advance ruling only binds the company that asked and its specific tax office; it is not a universal law that automatically applies to your business.
If you do nothing
If you claim credit for construction costs that are actually for a building, the tax department may issue a recovery notice with interest and penalties. Assuming this ruling applies to your specific structure without verifying its functional necessity could lead to a costly tax dispute.
The terms explained
- Input Tax Credit
- The tax a business pays on its purchases that it can use to reduce the tax it owes on its own sales.
- Plant and Machinery
- Equipment, apparatus, or structures used for business operations that are distinct from general building or civil structures.
- Immovable Property
- Permanent structures like buildings or land improvements where GST paid on construction is generally not eligible for credit.
The ruling in detail
Authority for Advance Ruling
M/s. Apar Industries Ltd.
ADVANCE RULING NO. GUJ/GAAR/R/2026/15, dated 08.05.2026 · Gujarat
Questions before the authority
- Whether the applicant is eligible to avail input tax credit on inputs and input services used in the setting up of the continuous catenary vulcanization tower at the factory of the applicant for the manufacture of insulated cables, and not restricted in terms of Section 17(5)(c) and 17(5)(d) of the CGST Act, 2017?
Facts
The applicant is setting up a new factory for manufacturing high-voltage cross-linked polyethylene insulated cables. They are constructing a continuous catenary vulcanization (CCV) tower, which is a specialized vertical steel structure designed to house machinery essential for the vulcanization process. The applicant sought a ruling on whether the GST paid on inputs and input services for the construction of this tower is eligible for input tax credit.
Ruling
| Question | What the authority ruled |
|---|---|
| Eligibility of ITC on CCV tower construction | Yes, the applicant is eligible to avail input tax credit. The tower is considered plant and machinery as it provides essential structural support for the manufacturing process. |
The Authority held that the CCV tower qualifies as plant and machinery because it provides essential structural support for the machinery used in the manufacturing process. Consequently, the input tax credit on the inputs and input services used for its construction is not blocked under Section 17(5)(c) or 17(5)(d) of the CGST Act. The applicant is therefore eligible to avail the input tax credit.
Reasoning
The Authority determined that the CCV tower is an **integral structural support** necessary for the vulcanization process, which is a technological requirement for manufacturing high-voltage cables. Relying on the definition of plant and machinery in the explanation to Section 17, the Authority concluded that the tower is not a civil structure but an apparatus used for making outward supply. It further drew an analogy from a CBIC circular regarding ducts and manholes in OFC networks to support the view that structural supports for machinery are not restricted. The ruling also cited a precedent from the Gujarat Appellate Authority of Advance Ruling in the case of M/s. KEI Industries Ltd.
Provisions relied on
- Section 16(1) of the CGST Act, 2017
- Section 17(5)(c) of the CGST Act, 2017
- Section 17(5)(d) of the CGST Act, 2017
- Circular No. 219/13/2024-GST dated 26.06.2024
For the practitioner
This ruling is highly beneficial for manufacturers who construct specialized support structures for heavy machinery, as it confirms that such structures can qualify as **plant and machinery** rather than immovable property. It allows practitioners to claim ITC on construction services for such structures by establishing their functional necessity to the manufacturing process. However, it does not provide a blanket exemption for all construction activities, as the eligibility remains contingent on the structure being an essential support for specific machinery.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/1-apar_industries_ltd_0001_compressed_1.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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