Question 114: Find enclosed our query regarding eligibility of Input Tax Credit under CGST Act:-

As per Section 17 Sub section (5) (c), 'Works contract Service when supplied for the construction of an immovable property(other than plant machinery) is not entitle for Input Tax Credit'.

Again as per Section 17 Sub Section (5)(d), 'any goods or services received by taxable person towards construction of immovable property(other than plant machinery) is not eligible for ITC'.

Construction defined as the activities which include 're-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property'.

Further Plant Machinery is defined as 'apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports' but excludes:-

(a) land, building or any other civil structures;

(b) telecommunication towers; and

(c) pipelines laid outside the factory premises

Thus Plant machinery may also be considered as immovable property (although it can be moved to another place by removing the bolts & support structures) as it is fixed to earth by foundation or structural support, but Credit is admissible on such plant machinery & its foundation/support structures.

The exclusion clause comprises the list of both moveable property (Telecommunication towers, Civil Structures which are bolted on fixed concrete structure) & immovable property ( land, building).

Now our query is :-

1) In the exclusion clause is civil structure means both movable & immovable in nature or only immovable in nature'

2) Is ITC is available for Civil structures viz. angle, channel, joists etc. which are fixed/ bolted on immovable concrete structure & can be moved to some other place later on'

3) Is ITC not available on all supply of goods & services in relation to construction of immovable property (to the extent of capitalization) such as architects, interior decorators, surveyors, engineers and other related experts services or estate agents as mentioned in Section 12(3)(a) of IGST Act'

4) In project some supply of services are received for Plant Machinery as well as civil immovable property i.e. common for both & are capitalized subsequently. For example, painting, scaffolding, firefighting, technical services etc. Now query is to what extent ITC will be available on such supply of services'

Requested to clarify the above issues.

Answer 1. In general Civil structures likes bridges, tunnels etc are immovable in nature. Exclusion clause specifically covers any other civil structures, therefore both movable and immovable civil structures are excluded.


2. As per section 17(5)(d), specifically restricts ITC on any goods or services received by taxable person towards construction of immovable property(other than plant machinery)
Further Plant Machinery is defined as 'apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports' but excludes:-
(a) land, building or any other civil structures
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Therefore the question of ITC on goods or services ( angle, channel, joists etc.) fixed on concrete structures ( Civil structures) does not arise.


3. The services of engineer architect are relating to construction but the services of interior decorator or surveyor may/ may not be related to construction. The credit will be available if it is not related to construction.

4. Section 17(5)(d) states that ITC is not restricted in case of plant and machinery, therefore ITC on common services used for plant machinery and civil structures is available proportionately on plant machinery.

You are suggested to take separate bills for common services used for plant machinery and civil structures respectively. (reply dt. 05/29/2018)