QUESTION

We are manufacturers of taxable goods. For increasing the production capacity, we are planning to install one additional plant in the same premises. In order to protect the plant from monsoon rains, dust and heat, we shall construct one huge godown-like structure with the help of MS beams, angles, plates and corrugated sheets. Foundation will be made of heavy concrete for voble-free operation of the plant. Part of the area shall be used for storage of raw material as well as finished goods. We wish to know whether, we are entitled to avail ITC on MS beams, angles, plates, corrugated plates, cement, steel bars, electrical cables, and electrical equipment, centralised air conditioning system etc.

ANSWER

Facts of the case: Eligibility of ITC on MS beams, angles, plates, corrugated plates, cement, steel bars, electrical cables, and electrical equipment, centralised air conditioning system etc. used for construction of godown.

Law Applicable:
SECTION 17(5) OF CGST ACT
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation.'' For the purposes of clauses (c) and (d), the expression 'construction' includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property;

Interpretation: In view of section 17(5) ITC will not be eligible on goods and services used for construction of an immovable property other than plant or machinery. Therefore ITC will not be eligible for MS beams, angles, plates, corrugated plates, cement, steel bars, electrical cables, centralised air conditioning system etc. used for construction of godown.

However ITC will be eligible on Electrical equipments as ITC is not restricted on plant and machinery.

Conclusion:ITC will not be eligible for MS beams, angles, plates, corrugated plates, cement, steel bars, electrical cables, centralised air conditioning system etc. used for construction of godown. ITC will be eligible on Electrical equipments(Reply dt.25-02-2020)