ITC is allowed on civil foundations and structural supports exclusively designed for plant and machinery.
The Dispute: Immovable Property vs. Plant & Machinery
The Conflict: The applicant, a pharmaceutical manufacturer, built specialized Reinforced Cement Concrete (RCC) foundations and steel supports to hold heavy API (Active Pharmaceutical Ingredient) machinery. Under Section 17(5)(c) of the GST Act, ITC is generally blocked for “works contract services” when they result in immovable property.
The Question: Are these foundations part of the “building” (blocked) or part of the “plant and machinery” (allowed)?
The Judicial Verdict
The Authority ruled in favour of the Assessee, carving out a clear distinction between general civil structures and machine-specific supports:
1. The Statutory Exception
While Section 17(5)(c) blocks ITC for immovable property construction, it explicitly excludes “plant and machinery.” The Explanation to Section 17 defines plant and machinery as apparatus, equipment, and machinery fixed to earth by foundation or structural support.
2. The “Sole Purpose” Test
The Engineer’s report was crucial. It proved that these RCC and steel frameworks:
Were engineered specifically for the dimensions and vibration requirements of the API machines.
Had no utility as a general building or “other civil structure.”
Existed solely to mount and stabilize the equipment.
3. Circular Support
The Authority relied on CBIC Circulars (relating to similar items like OFC ducts) which clarify that if a component is essential for the functioning and fixation of the plant and machinery, it becomes part of that machinery for tax purposes.
Key Takeaways for Manufacturers
Maintain Technical Documentation: If you are setting up a factory, ensure you have an Engineer’s Certificate or structural drawing showing that specific civil works are “foundations for machinery” and not just general flooring or walls.
Accounting Treatment: Capitalize these foundation costs under the “Plant and Machinery” head in your books rather than “Factory Building” to align your accounting with your tax claim.
Excluded Items: Remember that the law still strictly blocks ITC for:
Land and Buildings (general sheds/offices).
Telecommunication towers.
Pipelines laid outside the factory premises.
Scope of “Plant”: This ruling reinforces that “Plant” is not just the machine itself but the entire engineered ecosystem (supports, foundations, and apparatus) required to make the machine operational.
AUTHORITY FOR ADVANCE RULING , GUJARAT
CPL Pharmaceuticals (P.) Ltd., In re*
SUSHMA MORA and VISHAL MALANI, Member
GUJ/GAAR/R/2026/11
In Application No. Advance Ruling/SGST & CGST/2025/AR/35
In Application No. Advance Ruling/SGST & CGST/2025/AR/35
APRIL 1, 2026
Ms. Priyanka Kalwani and Ms. Aanchal Trivedi, Advs. for the Applicant.
PROCEEDINGS
Brief facts:
1. M/s. CPL Pharmaceuticals Private Limited GIDC Industrial Estate, Phase Dahej-II, Dahej, Bharuch, Gujarat -392130 [for short – ‘applicant’] is registered under GST and their GSTIN is 24AAJCC2124P1ZL.
2. The Applicant is a public limited company incorporated under the provisions of the Companies Act, 1956 and is inter alia engaged in the manufacture and supply of Active Pharmaceutical Ingredients (API). the Applicant has set up a new plant at GIDC Dahej for manufacturing APIs. In order to carry out the construction work of the API plant in GIDC Dahej, Bharuch. Gujarat, the Applicant has issued various Purchase Orders to M/s Vimit Construction.
3. APIs are manufactured through a multi-step process that involves complex chemical methods. The manufacturing process of APIs is as below:-
Introduction of API starting material and Solvent
Raw materials and Solvents: The API manufacturing begins with the procurement of raw materials including active substances, reagents, and solvents. These materials must meet stringent quality standards to ensure the efficacy and safety of the final product. These materials are carefully measured and introduced into the reaction vessel, typically a reactor, under controlled conditions.
Production of intermediate by chemical reaction in Reactor
Chemical reaction in Reactor: Chemical reactor is a specialized vessel equipped with agitators (stirrers) to ensure thorough mixing of ingredients, and heating/cooling jackets to control the reaction temperature precisely. Inside the reactor, the starting raw materials are dissolved in the solvent, to undergo a controlled chemical reaction. This reaction transforms the starting material into an “intermediate” product.
Isolation and Purification
Once the intermediate is formed, it needs to be separated from impurities (like unreacted starting materials, by-products and spent solvents) and purified to ensure it meets the required quality standards. This involves several distinct operations:
Distillation: Post-reaction, distillation is used to separate components based on their different boiling points. This step is used to remove solvents from the reaction mixture or to purify intermediates/APIs by separating them from volatile impurities.
Crystallization: It is used to purify the API by forming solid crystals from a solution. Controlled cooling or solvent evaporation induces crystallization, which is critical for achieving the desired purity and polymorphic form of the API.
Filtration: Following crystallization, filtration separates the solid API crystals from the mother liquor (containing solvent and dissolved impurities). Agitated Nutsche Filters (ANF) are utilized for this purpose, allowing for filtration under vacuum or pressure in a closed system, thereby minimizing solvent loss and exposure.
Drying: The filtered API crystals contain residual solvents and moisture, which are removed through drying. Dryers such as vacuum tray dryers or conical blender dryers are used, providing controlled heating to achieve the desired moisture content without damaging the API.
Physical processing
Milling: Dry API crystals are milled to achieve a uniform particle size, which is essential for consistent drug formulation and bioavailability. Milling equipment reduces particle size through mechanical means, ensuring the API meets specified size distribution criteria.
Sifting: Post-milling, the API powder is sifted to remove oversized particles and ensure uniformity. Sifters or sieves with defined mesh sizes are employed to achieve the desired particle size distribution.
Packaging
Packaging: The final API product is packaged under controlled conditions to prevent contamination and degradation.
4. As the manufacturing of APIs involves a highly controlled and regulated process to ensure quality, efficacy and safety. The following equipments would be installed inside the API Plant:
Reactor: The Applicant has installed multiple batch reactors in the API plant which are the core processing unit for the chemical manufacturing process. These reactors are primarily of 2 types: stainless steel reactors and mild steel glass-lined reactors. The reactors are used initially for dissolving the starting raw materials with the solvent to undergo controlled chemical reaction, which yields an intermediate product. Further, such reactors are also used in downstream processes including distillation and crystallization for manufacturing APIs.
Agitated Nutsch filter/Centrifuge: This equipment is a combination of a filter and dryer in one unit, and is used to separate solids from liquids, wash and dry the product.
Condenser: This is a crucial equipment in the API manufacturing process. The condenser removes excess heat from the system, which is essential for maintaining the desired temperature during chemical reactions. It also aids in the phase change of solvents and other chemicals from vapor to liquid, which is particularly important in processes like distillation and crystallization. Condensers are also used to recover solvents by condensing the vapor back into liquid form.
Blender: A blender is used for homogenous mixing of the API and excipients, which helps in maintaining the uniformity of the active ingredient throughout the batch, ensuring each dosage form contains the correct amount of API. Sifter: A sifter is used for separating particles such as fibers, metal fragments, or other debris from raw materials.
Dryer: The primary function of a dryer is to remove moisture from the API, ensuring that the final product is dry and stable.
Additionally, in order to maintain controlled temperatures, humidity and cleanroom conditions, the Applicant has also installed utilities such as boiler, cooling tower, brine plant, chilling plant, HVAC within the factory premises.
5. These machineries and equipment cannot be placed directly on the land or its surface without adequate structures to support them. Due to the operational load, torque, and vibrations generated during use, a specifically engineered foundation is essential prior to the installation of such machinery and equipment. The foundation serves critical purposes, including providing structural stability, preventing overturning, absorbing vibrations, and ensuring proper alignment and positioning of the equipment. In the absence of such a foundation, the machinery is susceptible to operational damage, misalignment, and potential hazards due to instability. Therefore, the aforementioned machinery and equipment is installed and supported on Reinforced Cement Concrete (RCC) foundation coupled with steel structural support. This robust foundation is critical to ensure inherent stability and strength required for these precision machines and equipment during operation. The construction is done as per IS 456:2000 (Code of practice for plain and reinforced concrete) and IS 800: 2007 (General construction in steel Code of Practice). The foundations are constructed as per IS 2974 (Code of practice for design and construction of machine foundations).
6. As per the applicant, the following construction has been undertaken for the foundation and steel structures on which the various machinery and equipment are installed in the API plant:-
| Sr.No. | Description of work as per PO | Nature of work |
| 1. | Civil, Structural and Architectural work for Sartan building | The Sartan is a building that houses various process and utility equipment. In order to install such machinery and equipment. the Applicant is required to construct RCC structures including key load-bearing components such as beams, slabs, pedestals, etc. which are specifically designed to support the load of all installed equipment and ultimately transfer these loads to the ground through pile foundation which is also integral part of building. |
| 2. | Civil, Structural and Architectural work for fire pump house | The fire pump house is a civil structure that houses various large tanks and pumps for the fire system. In order to install the various tanks and pumps, the Applicant is required to construct RCC structures which include key load-bearing elements such as slabs. pedestals, etc. which are specifically designed to support the load of all installed equipment and ultimately transfer these loads to the ground. |
| 3. | Civil, Structural and Architectural work for substation | The sub-station is a civil structure that houses various large electrical panels, diesel generators and transformer for the electrical system which supports the entire manufacturing plant area. In order to install such machinery and equipment, the Applicant is required to construct RCC structures including key load-bearing components such as beams, slabs, pedestals, etc. which are specifically designed to support the load of all installed equipment and ultimately transfer these loads to the ground. |
| 4 | Civil, Structural and Architectural work for OSBL pipe rack | The OSBL pipe racks are critical structures constructed to support the routing of pipelines carrying raw materials, finished products and utilities. These pipelines facilitate the transfer of materials to and from the respective storage tanks and serve various process units, including Sartan and other associated locations. In order to construct the OSBL pipe rack, the Applicant is required to construct RCC structures including key load-bearing elements such as columns, beams, pedestals, etc. which are specifically designed to support the weight of the pipework and the dynamic load associated with the operational flow. These structural components collectively transfer the load safely to the ground. |
| 5. | CCOE & Non-CCOE tank farm, UG tank, Fire Water tank, Sartan tank. ML tank. WTP tank | These tank farms consist of process tanks and raw material storage tanks. In order to install such tanks, a robust foundation is essential to ensure the structural stability and operational safety of these tanks. This includes the required combination of proper foundation, steel reinforcement, and concrete etc. designed to support the load and process requirements. |
| 6 | Civil, Structural and Architectural work for Boiler | The boiler block is a civil structure that accommodates the boiler and associated utility equipment. In order to construct the boiler block. the Applicant is required to construct RCC structures comprising essential loadbearing elements such as columns, beams, slabs, and pedestals, all specifically engineered to support the operational loads of the installed equipment and to transfer the load safely to the foundation. |
| 7. | Civil, Structural and Architectural work for WTP plant | The WTP block accommodates various water tanks and filtration system for the production process. The Applicant is required to construct RCC structures designed specifically to support the operational load of the installed equipment to transfer the load safely to the foundation. |
| 8. | 164 Piles | The pile foundations are constructed for the sartan block, boiler block, and other blocks within the API plant, which is essential for supporting the various machinery and associated utilities installed in the API plant. The pile foundation ensures structural stability and strength which is necessary for installing various machinery in the API plant. |
| 9. | Piling and backfilling work at ETP | The Effluent Treatment Plant and Sewage Treatment Plant is a civil structure that houses various process and utility equipment for the treatment plants. It also includes MEE and RO plant. In order to construct the ETP and STP plants, the Applicant is required to construct robust RCC foundations to support various equipment installed in the ETP and STP For this purpose, the piling and backfilling work is critical for preparing the plants’ plinth below the concrete for various RCC structures. The piling, back filling and construction work for RCC foundation of the STP and ETP are used for the foundational and structural support of plant and machinery installed therein as it establishes a uniformly stable and unyielding base across the plant. |
| 10. | Structural Steel | The OSBL pipe rack mentioned above is an essential structure designed to route and support the pipelines that carry raw materials, finished products and utility lines. In order to construct the pipe rack, structural steel members are used, which serve as the primary support framework for the pipelines. Such structural steel framework bears both the self-load of the pipe rack and the dynamic load of the materials being transported through the pipelines. These loads are then effectively transferred through the underlying RCC structure to the foundation. |
| 11. | Civil work of CCOE tank farm area | These tank farms consist of process tanks and raw material storage tanks. In order to install such tanks, a robust foundation is essential to ensure the structural stability and operational safety of these tanks. This includes the required combination of proper foundation. steel reinforcement, and concrete etc. designed to support the load and process requirements. |
| 12. | Non-scheduled from CSA job | The Applicant has procured additional items for the foundation and structural works related to the tank farms and sartan block. |
| 13. | Goods supplied for ETP related civil work | The Applicant has procured additional items for the foundation and structural work related to the ETP. |
7. A site inspection dated 17.01.2025 was conducted by the Chartered Engineer, pursuant to which a plant inspection report dated 21.01.2025 has been issued to the Applicant, which certifies that the RCC foundation and steel structural works is being undertaken by the Applicant in order to install various equipment and machinery used in manufacture of APIs.
8. The supplier viz. M/s Vimit Construction has issued tax invoices to the Applicant from time to time to recover the consideration for construction of foundation and structural support for the various equipment installed in the factory premises of the Applicant and have discharged GST at the rate of 18% by adopting the SAC 995413 having description “Construction services of industrial buildings such as buildings used for production activities (used for assembly line activities), workshops, storage buildings and other similar industrial buildings”. During the F.Y. 2023-24, M/s Vimit Construction had raised tax invoices for total consideration of Rs. 19,47,77,994.27 on which GST amounting to Rs. 2,97,11,897.43 has been discharged. The Applicant has availed the proportionate ITC amounting to Rs. 2,97,11,897.43 on these input services received from M/s Vimit Construction, in relation to foundation and structural support for the various equipment installed in the API plant within the factory premises of the Applicant.
9. The Applicant has sought a ruling on the following issue:
Whether the Applicant is eligible to avail ITC on input services used for construction of foundation and structural support for plant and machinery installed within the factory of the Applicant, for manufacture of Active Pharmaceutical Ingredients, in terms of Section 17(5)(c) of the CGST Act, 2017 ?
10. The applicant has submitted their interpretation of law as under:-
| (a) | The inputs and input services procured by the Applicant are in the course or furtherance of business of the Applicant in terms of Section 16 of the CGST Act. The API plant is to be used for manufacturing of APIs which will be supplied by the Applicant to its customers. Thus, the input services procured by the Applicant for construction of foundation and structural support for various equipment at the factory of the Applicant is in the course or furtherance of business of the Applicant. |
| (b) | The input services procured by the Applicant are used for foundation and structural support of the equipment installed for manufacturing of APIs, which are ‘plant and machinery’ in terms of Explanation to Section 17 of the CGST Act. In order to qualify as ‘plant and machinery’ in terms of Explanation to Section 17 of the CGST Act, two major requirements need to be satisfied – |
| (a) | It is an ‘apparatus’, ‘equipment’ or ‘machinery’ fixed to earth by foundation or structural support; |
| (b) | It is used for making an outward supply of goods or services or both. |
| (c) | Various equipment which are to be set up in the API plant will qualify as “apparatus since the system includes setting up of a collection of instruments, tools, parts or other equipment used for a particular well-defined purpose. It can also be said to be ‘machinery’ as the complete API plant is a combination of various things/components and the harmonious working of all such components results in the desired end of manufacturing APIs. |
| (d) | As per CBIC Circular No. 219/13/2024-GST dated 26.06.2024, ducts and manholes used in the network of OFCs are falling within the scope of plant and machinery’ in terms of Explanation to Section 17 of the CGST Act, 2017. An inference can be drawn that since various equipment installed are essential and necessary for manufacturing of APIs, accordingly, the equipment installed for the said purpose will be covered under the definition of ‘plant & machinery’ as they will be integral part used for making outward supply. |
| (e) | The expression “plant and machinery” under the Explanation to Section 17 of the CGST Act includes the foundation or structural support for such plant and machinery. ‘Foundation and structural support’ have not been defined in the CGST Act. Further, there exists no exclusion from the scope of ‘foundation and structural support’ when such work is undertaken for the installation and erection of the plant and machinery. Therefore, all such foundational works undertaken for the installation of plant and machinery shall be deemed to be part of plant and machinery in accordance with the Explanation under Section 17 of the CGST Act. |
| (f) | The foundation works have been executed in accordance with IS 2974 part 5: 1987 (Design and Construction of Machine Foundation) considering the machine loads and dynamic force, torque & vibrations of machines. |
| (g) | The various equipments used for manufacturing of APIs are installed either on Reinforced Cement Concrete (“RCC”) structures or on structural steel framework. The RCC structure provides a strong and stable foundation to support equipments, ensure proper alignment and are specifically designed to distribute load of heavy equipments. It includes key load-bearing elements such as columns, beams, slabs, pedestals, etc. In the present case, tank farms were installed on RCC circular platforms and machinery are installed on structural steel tied with steel beams connected to RCC beams to give structural support, strength and stability. |
| (h) | Structural steel plays a crucial role in the installation and support of equipment due to its high strength-to-weight ratio and ability to withstand heavy loads. In the present case, OSBL pipe racks are designed to support the routing of pipelines that carry raw materials, finished products, and utility lines. These pipelines enable the transfer of materials between storage tanks and various process units, including Sartan and other connected facilities. Therefore, structural steel is used to provide primary support and stability to OSBL pipe racks, bearing both the self-load of the pipe rack and the dynamic load of the materials being transported. |
| (i) | Detailed functions of various equipments installed with RCC and structural steel are as follows :- |
Foundational and structural support to equipments in Sartan plant; During API manufacturing process, sartans like losartan are produced and the key equipments includes reaction vessels, distillation units, crystallization systems, filtration and washing equipment, drying equipment, and analytical instruments for quality control. In order to ensure stability and structural support, RCC structure was created around them including key load-bearing elements such as columns, beams, slabs. pedestals, etc.
RCC structural support to tank and pumps for the fire system: In API manufacturing process, fire plants utilize specific equipments for fire protection such as fire pumps typically centrifugal or submersible (essential for delivering water at the necessary pressure and flow rate) and fire tanks. Due to variant pressure and vibrations, unanchored pumps may be misaligned causing various safety hazards. Thus, it was essential to mount these equipments on a concrete pedestal or RCC foundation.
Structural support to equipments in sub-station: Equipments such as transformers, diesel generator panels and electrical panels are used in sub-station. These components are heavy, sensitive, and essential for power distribution and emergency systems. Improper or absent structural support can lead to equipment failure, safety hazards, and regulatory non-compliance. Thus, structural support was critically important for these equipments.
Structural steel support to OSBL pipe racks: These OSBL pipe racks are critical structures constructed to serve as the main arteries for transporting utilities and process fluids between units. These pipes carry heavy loads, expands and contracts due to temperature changes. Without proper structural support, they may collapse, misalign or rupture. Thus, RCC and structural support are essential for these pipe racks.
Foundational support to CCOE & Non-CCOE tank farm. UG tank, Fire water tank, Sartan tank, ML tank, WTP tank: These are process tanks and raw material storage tanks and not civil water tanks or utility tanks. A robust foundation is essential to ensure the structural stability and operational safety of these tanks. This includes the required combination of proper foundation, steel reinforcement and concrete designed to support the load and process requirements.
Structural support to Boiler: It operates under high pressure and temperature, which imposes significant mechanical and thermal stresses. Structural support for a boiler is essential due to the equipment’s size, weight, operational dynamics, and safety-critical role in industrial and commercial facilities. Failure of which can lead to boiler distortion, tube leakage, misalignment, etc.
RCC support to equipment in WTP plant: Equipments like filters, clarifiers, pumps, etc., are heavy, operate continuously and accommodated in WTP plant. RCC support for these equipments provide structural support for both stationary and dynamic equipment. RCC is essential not just for load-bearing capacity but also for operational safety, durability, and regulatory compliance.
| (j) | It is submitted that ITC has been availed solely in relation to the foundational and structural support provided to plant and machinery as iterated above through RCC and structural steel components. It is further submitted that no ITC has been claimed in respect of civil works such as brickwork, plastering. flooring, or any other construction activity not directly attributable to the installation or support of equipment. |
| (k) | It is further submitted that all the components of the equipments are capable of being dismantled and sold without being destroyed and embedded into the earth because of operational efficiency; it is not an immovable property. |
| (l) | Reliance is placed on the ruling issued by the Appellate Authority for Advance Rulings, Gujarat in the case of KEI Industries Ltd., In re (AAR-GUJ)/2025-VIL-37-AAAR. The issue was regarding ITC eligibility on inputs and input services used for construction of a concrete tower to act as foundation and structural support for VCV manufacturing line. It was held that the VCV manufacturing line qualifies as plant and machinery’ and accordingly, the concrete tower is an essential foundation and structural support for such VCV manufacturing line. It was further observed that the concrete structure is not a general building but a specialized support system that is integral to the functioning of the machinery, providing stability and absorbing vibrations. It was held that ITC on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the applicant for manufacture of EHV cables is eligible to the applicant as it constitutes foundation and structural support for ‘plant and machinery’ in terms of Explanation to Section 17 of the CGST Act, 2017. |
| (m) | Reliance in this regard is also placed on the decision of Sirpur Paper Mills Ltd. v. CCE ELT 3 (SC), wherein the Hon’ble Supreme Court has held that where Plant & Machinery are capable of being dismantled and sold without being destroyed and are only embedded to the earth because of operational efficiency, it is not an immovable property. Applying this ratio, the ITC on input services procured for construction of RCC and structural steel for installing and structurally supporting equipments is eligible to the Applicant in terms of Section 17 of the CGST Act. |
11. The Assistant Commissioner, CGST, Div-VII, Bharuch, Vadodara-II Commissionerate has vide letter dtd. 19.11.2025 submitted that ITC on input services used for construction of foundation and structural support for plant and machinery appears to be admissible in view of the Explanation to Section 17(5) of the CGST Act, 2017, which includes foundation and structural support within the scope of ‘Plant and machinery’.
12. Personal hearing was granted on 06.02.2026 wherein Ms Priyanka Kalwani and Ms Aanchal Trivedi, Advocates appeared for the applicant and reiterated the facts & grounds as stated in the application.
Discussion and findings
13. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act.
14. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made both oral and written during the course of personal hearing. We have also considered the issue involved, the relevant facts & the applicant’s submission/interpretation of law in respect of question on which the advance ruling is sought.
15. The short issue to be decided is whether the applicant can avail ITC on the input services used for the construction of foundation and structural support for the equipments installed inside the API plant. The equipments which are installed in these plants are Reactors, Kettles/Reboiler/Distillation columns, Phase separators, Heat Exchangers, Agitated Nutsch filter/Centrifuge, Condenser, Blender, Sifter, and Dryer, whose functions has already been mentioned in Para 4 supra. Additionally, in order to maintain controlled temperatures, humidity and cleanroom conditions, the Applicant has also installed utilities such as boiler, cooling tower, brine plant, chilling plant, HVAC within the factory premises. As per the applicant, these equipments/machinery cannot be placed directly on land without adequate supporting structures or foundations to support them. The applicant’s view is that they are eligible for ITC on input services which are used in the construction of these supporting structures/ foundations under Section 16 of the CGST Act, 2017. They are also of the view that these input services are not hit by the bar provided in Section 17, ibid.
16. As per Section 16 of the Act, ibid, a registered person is entitled to take credit of ITC charged on any supply of goods or services or both to him, which are used or intended to be used in the course or furtherance of his business. The applicant is in the business of manufacture and supply of Active Pharmaceutical Ingredients. They have set up a new plant at GIDC Dahej for manufacturing APIs. The manufacturing process of APIs is detailed in Para 3. There are many equipments, as detailed in para 4 supra, which are installed in the API plant, as the manufacturing of APIs involves a highly controlled and regulated process to ensure quality, efficacy and safety. Further, these equipments have to be installed on foundations or supported by structures to provide structural stability, preventing overturning, absorbing vibrations, and ensuring proper alignment and positioning of the equipment. Para 10(i) details the foundation and structural support requirements for the various types of equipment and machinery. As these equipments are utilized in API manufacturing, both the equipments and the input services for their foundations and structural supports, are integral to the furtherance of the applicant’s business.
17. While Section 16 entitles a registered person to take credit of ITC charged on any supply of goods or services or both to him, which are used or intended to be used in the course or furtherance of his business, Section 17(5) of the Act, ibid restricts the ITC in certain cases, even if they are used in the course or furtherance of business. The applicant is seeking ITC of the services used in the construction of foundations and support structures. These services are provided by M/s Vimit Construction. The details of work undertaken for the foundation and steel structures by the service providers, on which the various machinery and equipment are to be installed in the API plant, have been mentioned in Para 6 supra. The foundations are mostly MS Steel Structures and RCC, which comes under the ambit of works contract service. Section 17(5)(c) of the Act, ibid restricts the ITC of works contract services when supplied for construction of an immovable property. However, if the said works contract services are used in the construction of plant and machinery, then the ITC of the same can be availed by the service recipient.
18. Thus, the issue for determination is whether the foundation and structural support fall under the definition of ‘plant and machinery’ as mentioned in Section 17 of the Act. Explanation to Section 17, defines what comes under the ambit of ‘plant and machinery’, which we reproduce below:-
Explanation:- For the purposes of this Chapter and Chapter VI. the expression “plant and machinery” means 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-
| (i) | land, building or any other civil structures; |
| (ii) | telecommunication towers; and |
| (iii) | pipelines laid outside the factory premises. |
[Emphasis supplied]
As per the above explanation, ‘plant and machinery’ means 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. The definition also includes foundation and structural support of the apparatus, equipment, and machinery but excludes land, building or any other civil structures, telecommunication towers and the pipelines laid outside the factory.
19. Thus, what qualifies as ‘plant and machinery’ is an apparatus, equipment, and machinery which is fixed to earth by foundation. Apparatus, equipment and machinery are not defined in the Act. The dictionary meaning of an apparatus and an equipment is a collection of instruments, machines, tools, parts, other equipment used for a particular purpose and that of machinery is a collection of items designed to perform a mechanical function. The various equipments which are set up in the API plant would therefore qualify as an apparatus/machinery which are used to get the desired result. Since, the equipments qualify as an apparatus, they as well as their foundation and structural support would fall under the ambit of ‘plant and machinery’ in view of the Explanation appended to Section 17.
20. We have also gone through the Plant Inspection report dated 21.01.2025 issued by Shri Mihir V. Kamani, Chartered Engineer, which has been issued after the site inspection on 17.01.2025. The scope of the work as per the report is reproduced below:-
“Visual Inspection of machineries in plants were supported or installed on which structure. Describe structure on which machines installed, and also describe why is it necessary to make RCC/Steel structure to rest machineries on it.”
Subsequent to the site inspection, the Chartered Engineer has summarised that the majority of machinery is mounted on RCC and steel frameworks, with dedicated steel structures provided for pipe racks, high-rise equipment, and vessels. Supporting photographic evidence has also been provided. He has also emphasized that many machineries cannot be installed directly on open ground; rather, specialized civil structures are essential to manage dead loads, torque, vibrations, Dynamic load etc. Adherence to the relevant IS Codes is mandatory to ensure operational stability, prevent overturning, and reduce vibrations. In conclusion, he has submitted that the machineries were supported on RCC and Steel structures and these structures were made only to support the machines.
21. We find that CBIC in Circular No. 219/13/2024-GST dated. 26.06.2024 has clarified that ITC on ducts and manholes used in network of Optical Fiber Cables (OFC) are eligible, as they are the basic components for the OFC network used in providing telecommunication services. These ducts are necessary for not only laying of OFC but also their upkeep and maintenance. It was further observed in the Circular that ducts and manholes are covered under the definition of “plant and machinery” as they are used as part of the OFC network for making outward supply of transmission of telecommunication signals from one point to another. Moreover, ducts and manholes used in network of optical fibre cables (OFCs) have not been specifically excluded from the definition of “plant and machinery” In the Explanation to Section 17 of CGST Act, as they are neither in nature of land, building or civil structures nor are in nature of telecommunication towers or pipelines laid outside the factory premises. In the instant case, as per the applicant, the RCC structures for foundations are an integral part of the machineries as without them the machinery cannot properly function. Further, structural steel plays a crucial role in the installation and support of equipment due to its ability to withstand heavy loads. The OSBL pipe racks are designed to support the routing of pipelines that carry raw materials, finished products, and utility lines. These OSBL pipe racks are critical structures constructed to serve as the main arteries for transporting utilities and process fluids between units. These pipes carry heavy loads, expands and contracts due to temperature changes. Without proper structural steel support, they may collapse, misalign or rupture. Thus, when ITC on ducts and manholes used in network of optical fibre cables (OFCs) have been allowed, we are of the opinion that ITC is also available on foundation and structural supports. Moreover, they are also specifically included in the definition of “plant and machinery” in the Explanation to section 17 of CGST Act.
22. We now come to the exclusions to the definition of ‘Plant and Machinery’, mentioned in the Explanation to Section 17, which are:-
| (i) | land, building or any other civil structures; |
| (ii) | telecommunication towers; and |
| (iii) | pipelines laid outside the factory premises. |
While the foundations and structural supports are not specifically excluded from the definition of ‘plant and machinery,’ a counter-argument may be made that their composition-primarily concrete and steel-places them within the ambit of ‘other civil structures’. We, however, find that the Gujarat Appellate Authority for Advance Ruling in the case of KEI Industries Ltd (supra), while holding that ITC on foundation and structural support relating to plant and machinery is allowed, has held that ‘other civil structures’ means civil structures other than foundation and structural support to plant and machinery. The relevant portion of the order is reproduced below:-
“16. On going through the layout of the VCV line which is reproduced in the impugned ruling, the process inside VCV tower undertaken at each floor and the weight of the significantly heavy components to be placed on each floor [reproduced supra], we are in agreement with the appellant’s averment that the concrete structure is essential to support and erect the VCV lines. It is more so since the appellant has stated that the concrete structure in the form of VCV tower serves as a critical foundation and support system for the manufacturing process; that it provides stable base for tower components; that it absorbs vibrations & ensures accurate positioning of extruder, cross head and other elements. Given these facts, we find that plant and machinery in terms of the second explanation, placed beneath section 17, ibid, specifically includes foundation and structural support. The exclusions from plant and machinery are also listed viz.
| (i) | land, building or any other civil structures; |
| (ii) | telecommunication towers; and |
| (iii) | pipelines laid outside the factory premises. |
Further, ‘other civil structures’ means civil structures other than foundation and structural support to plant and machinery.
17. Thus, the moment it is held that the ITC sought is on construction of foundation and structural support relating to plant and machinery, it moves out of the ambit of section 17(5)(c) and (d) even if it is on their own account. This being the case, we find that the applicant is eligible for availing the ITC on inputs and input services used for construction of concrete tower to support and erect the VCV lines at the factory of the appellant for manufacture of EHV cables.
18. The appellant, has also relied upon the clarification issued by CBIC vide its Circular No.219/13/2024-GST, dated 26.6.2024, viz .
……..Drawing the analogy from the aforementioned clarification, we find that when ITC is not restricted even in respect of ducts and manhole used in OFCs under section 17(5) of the CGST Act, 2017, the ITC, on inputs and input services used for construction of concrete tower to support and erect the VCV lines, for manufacture of EHV cables also, similarly, cannot be restricted.”
23. In view of the foregoing, we rule as under:-
RULING
Ques. 1. Whether the Applicant is eligible to avail ITC on input services used for construction of foundation and structural support for plant and machinery installed within the factory of the Applicant, for manufacture of Active Pharmaceutical Ingredients, in terms of Section 17(5)(c) of the CGST Act, 2017?
Ans 1: Yes, the Applicant is eligible to avail ITC on input services used for construction of foundation and structural support for plant and machinery installed within the factory of the Applicant, for manufacture of Active Pharmaceutical Ingredients, in terms of Section 17(5)(c) of the CGST Act, 2017.