Facts of the Case:

In this case, the applicant manufacturer under the CGST Act, expanded its plant and required enhanced electricity capacity of 4500 KVA at 66KV. For this purpose, it obtained permission from Gujarat Energy Transmission Corporation (GETCO) to establish a new connection. The applicant capitalised the cost of materials and services as enabling assets in its books and claimed depreciation on the taxable value. It sought a ruling on the availability of Input Tax Credit (ITC) on the procurement of capital goods and related services (such as cables, electrical equipment, installation, and supervision charges) used for transmission of electricity from the substation to the factory, even though the assets were located outside the factory premises.

The Applicant contended that ITC should be allowed as all conditions under Section 16(2) of the CGST Act—possession of invoice, receipt of goods/services, payment of tax to the government, and filing of returns—were fulfilled. The laying of underground cables does not qualify as “works contract” for immovable property, since cables and wires are movable assets, capable of being disconnected, coiled, and relocated. As per the Explanation to Section 17(5), such cables and equipment constitute “plant and machinery”, not “civil structures.”  The phrase “any other civil structure” in the explanation must be read ejusdem generis with land and building, implying it covers immovable property only.

Issue:

Whether the applicant is entitled to avail input tax credit under Sections 16 and 17 of the CGST Act, 2017, on the procurement of capital goods and related services used for laying of underground cables and installation of electrical equipment outside the factory premises for transmission of electricity?

Held that:

The Gujarat Authority for Advance Ruling (GAAR) held that:

• The underground cables, wires, and electrical equipment used to draw electricity from the GETCO substation to the factory constitute “plant and machinery” as per the Explanation to Section 17(5) of the CGST Act.
• Such infrastructure, though situated outside the factory premises, is movable and does not qualify as a “civil structure” or “immovable property.” Hence, it is not hit by the restriction under Section 17(5)(c) or (d).
• Reliance was placed on the CBIC Circular No. 219/13/2024-GST dated 26.06.2024, which clarified ITC eligibility for ducts and manholes used for OFC networks, and on the earlier GAAR ruling in M/s Elixir Industries Pvt. Ltd. [2024], upheld by the Appellate Authority in 2025.
• As the applicant had capitalised the assets and claimed depreciation only on the taxable value, the ITC claim was valid. However, in case of future transfer of ownership to GETCO, reversal under Section 18(6) would be required.

Accordingly, the Authority ruled that ITC is admissible on procurement of capital goods and related services used for the transmission of electricity from the power station of the DISCOM to the factory premises, even if installed outside the factory premises.

Case Name: M/s ALLEIMA INDIA PVT. LIMITED vide GUJ/GAAR/R/2025/44 (In Application No. Advance Ruling/SGST&CGST/2024/AR/27) dated 16.10.2025

To read the complete judgement 2025 Taxo.online 2751