The Authority for Advance Rulings, Gujarat in the case of M/s. HMSU ROLLERS (INDIA) PVT. LTD. vide Advance Ruling No. GUJ/GAAR/R/2025/15 (In Application No. Advance Ruling/SGST& CGST/2024/AR/06) dated 30.04.2025, provided ruling concerning the eligibility of input tax credit u/s 17(5)(c) and (d) of the CGST Act, in the context of works contract services and capital goods used for construction of immovable property and crane infrastructure. The AAR ruled that ITC is allowed only on plant and machinery not embedded into civil structure and clearly used in outward taxable supply. Thus, ITC is blocked on works contracts and goods/services used in construction of immovable property, including civil structures even if for business use unless covered by the limited exception.
Facts of the Case: The applicant is engaged in manufacture of rollers and is expanding its operations. As part of expansion, it installs a Pre-Engineered Building (PEB) designed to structurally support a 10-ton overhead crane. Crane installation depends structurally on the PEB verified by Chartered Engineer’s certificate. The Applicant sought an advance ruling on proportionate ITC eligibility for Works contract services used in the construction of a Pre-Engineered Building (PEB) and crane infrastructure; Capital goods, such as rails, electrification, and crane supports, used for the operation of an overhead crane inside the industrial shed.
Issue: Whether ITC is admissible on inputs (steel, cement), works contract services, and capital goods (rails, electrification etc.) associated with the PEB and crane? Also, ITC admissibility for Installation and Erection Services of the PEB when supplied for construction of immovable property, in the form of the factory which is an Integrated Factory Building with Gantry Beam, which in turn is used for mounting across the pre-cast concrete beams, poles and over which the crane would be operated.
Rulings: The AAR, Gujarat noted the legal provisions of Section 16(1), Section 17(5)(c) & (d) including retrospective amendments made through the Finance Act, 2025. The AAR also, referred the Supreme Court’s judgment in the case of Safari Retreats Pvt Ltd .
The AAR noted that PEB structure and gantry beams are civil structures, forming part of immovable property, which fixed to earth. Excluded from “plant and machinery” definition. Capitalised in books, hence considered “construction” per explanation to Section 17(5). Civil structures like factory buildings and gantry beams do not qualify as plant and machinery. Even if the gantry beam supports the crane, the beam itself is embedded in a building structure—excluded under Explanation 1. Hence, as per Section 17(5)(c) and (d), ITC is blocked unless the structure is “plant and machinery”.
Further, regarding the ITC admissibility on Crane Rails, Electrification, and Other Capital Goods, the AAR stated that once these goods are embedded or fixed in the civil structure (PEB), they become part of the immovable property. These are not standalone movable equipment but are structurally integrated, thus ineligible under Explanation 1. Therefore, ITC disallowed under Section 17(5)(d).
The AAR placed reliance upon rulings of AAAR, Tamil Nadu in the case of Coral Manufacturing Works, wherein the AAAR had allowed proportionate ITC on structural supports related to cranes. However, that ruling predated the Supreme Court decision and the Finance Act, 2025 amendment, and was not binding on other jurisdictions.
Therefore, ITC is not allowed on PEB structures, gantry beams, crane rails, electrification embedded into the structure, civil foundations.
