Facts of the Case:

In this case, the petitioner was engaged in the manufacture of Active Pharmaceutical Ingredients (APIs), established a new manufacturing plant at Dahej, Gujarat. For installation of various heavy and sophisticated machinery such as reactors, condensers, dryers, boilers, and pipe racks, the applicant undertook extensive civil and structural works including RCC foundations, piling, and steel support structures through a contractor who charged GST at 18% under works contract services.

These foundations were essential for stability, vibration control, and operational efficiency of the machinery. The applicant availed Input Tax Credit (ITC) on such input services, contending that these works constituted foundation and structural support of “plant and machinery” under the CGST Act.

Issue:

Whether ITC is admissible on works contract services used for construction of foundation and structural support for plant and machinery, or whether such credit is blocked under Section 17(5)(c) of the CGST Act as construction of immovable property.

Held That:

The Authority ruled in favour of the applicant and held that ITC is admissible on input services used for construction of foundation and structural support for plant and machinery.

It was observed that although Section 17(5)(c) restricts ITC on works contract services used for construction of immovable property, the restriction does not apply where such services are used for plant and machinery. The Explanation to Section 17 expressly includes foundation and structural support within the scope of “plant and machinery.”

The Authority further held that such specialized foundations are integral to the functioning of machinery and cannot be treated as general civil structures. Reliance was placed on CBIC Circulars and the AAAR ruling in KEI Industries Ltd., affirming that such infrastructure qualifies for ITC.

Case Name: In Re: M/s. CPL Pharmaceuticals Private Limited. dated 01.04.2026

To read the complete judgement 2026 Taxo.online 791