GST Advance Ruling on Input Tax Credit for Completed Construction
The Authority for Advance Ruling refused to decide on input tax credit eligibility because the construction work was already finished.
- Ruling
- Advance Ruling No. RAJ/AAR/2025-26/14 dated 21.11.2025
- Dated
- 21 Nov 2025
- 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
- CPL Pharmaceuticals asked if they could claim input tax credit for machinery foundations.
- The construction work was completed in previous financial years.
- The Authority rejected the application because it only rules on current or future activities.
In short
CPL Pharmaceuticals asked the Authority for Advance Ruling (AAR) if they could claim input tax credit (ITC) on construction services for machinery foundations. The law only allows the AAR to answer questions about work that is currently happening or planned for the future. Because the company had already finished the construction, the authority could not provide an answer.
What has changed
How it worked before
Businesses often assumed they could seek clarity on tax positions for past projects if they were still in the process of filing or adjusting their tax returns.
What has changed
The authority confirmed that it will not rule on completed transactions. This means if you have already finished a project, you cannot use the advance ruling process to confirm your tax treatment for that specific work.
Who this affects
Manufacturing businesses planning to build foundations for heavy machinery or other structural supports.
An example
A factory owner plans to build a new foundation for a large generator next month. They are unsure if they can claim input tax credit on the construction costs. They should file an application for an advance ruling now, before the construction starts. If they wait until the foundation is built, the authority will refuse to answer their question.
What you should do
If you have a question about whether you can claim input tax credit, you must apply for a ruling before the work begins or while it is still in progress. Remember that an advance ruling only applies to the business that asked the question and its specific tax office; it is not a general law for all businesses.
If you do nothing
If you assume this ruling allows you to claim credit for past work, you risk a tax audit and potential penalties. A tax officer may disagree with your interpretation, and you will have no protection from a formal ruling. You could be forced to pay back the credit plus interest and fines.
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.
- Advance Ruling
- A formal decision from the tax department on how GST laws apply to a specific business activity.
- Lyophilized injectables
- A type of medicine that is freeze-dried into a powder form to be mixed with liquid before injection.
The ruling in detail
Authority for Advance Ruling
M/s CPL Pharmaceuticals Private Limited, Ahmedabad, Gujarat
Advance Ruling No. RAJ/AAR/2025-26/14 dated 21.11.2025 · Rajasthan
Questions before the authority
- Whether the Applicant is eligible to avail ITC on input services used for construction of foundation and structural support for plant and machinery installed at the factory of the Applicant for manufacture of lyophilized injectables, in terms of Section 17(5)(c) of the CGST Act, 2017?
Facts
The applicant is setting up a new plant in Udaipur, Rajasthan, for manufacturing lyophilized injectable drugs. They engaged a contractor for construction works, including foundations and structural supports for heavy machinery, and sought an advance ruling on the eligibility of Input Tax Credit (ITC) for these services. The applicant argued that these foundations are integral to the plant and machinery and thus eligible for ITC.
Ruling
| Question | What the authority ruled |
|---|---|
| Eligibility of ITC on construction services for foundation and structural support | No ruling extended The authority held that the question is not related to activities being undertaken or proposed to be undertaken as required by Section 95 |
The Authority declined to provide a ruling on the merits of the question. It held that the activities in question had already been completed in previous years, whereas the definition of an advance ruling under Section 95 of the CGST Act requires the supply of goods or services to be either currently undertaken or proposed to be undertaken. Consequently, no ruling was extended regarding the eligibility of ITC.
Reasoning
The Authority relied on the definition of 'advance ruling' under Section 95 of the CGST Act, 2017, which limits the scope to supplies being undertaken or proposed to be undertaken. Upon reviewing the documents, the Authority found that the construction activities for the foundation and structural supports had already been rendered and completed in the financial years 2023-24 and 2024-25. Therefore, the Authority concluded it was constrained from considering the question on its merits as it did not meet the statutory requirement for an advance ruling.
Provisions relied on
- Section 17(5)(c) of the CGST Act, 2017
- Section 95 of the CGST Act, 2017
- Section 97(2)(d) of the CGST Act, 2017
For the practitioner
This ruling serves as a **procedural warning** for practitioners that an application for an advance ruling must be filed before the activity is completed. Because the applicant had already finished the construction work, the Authority refused to address the substantive issue of ITC eligibility under Section 17(5)(c). It does not provide a precedent on the merits of claiming ITC for foundation works.
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/cpl_pharmaceuticals.pdf
Legibility of the scan, as read: high.
Prepared 14-10-2026.
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