ITC On Pre-Engineered Building (PEB) Works and Crane Support Structure: Gujarat AAR Rules Against
HMSU Rollers (India) Pvt. Ltd.
Introduction:
In
a significant ruling, the Gujarat Authority for Advance Ruling (GAAR)
denied Input Tax Credit (ITC) on the construction of a Pre-Engineered
Building (PEB) and related infrastructure to M/s HMSU Rollers (India)
Pvt. Ltd. The AAR held that the supply of materials and services used in
constructing a factory building with an overhead crane gantry falls under the blocked
credit provisions of Section 17(5) of the CGST Act, 2017.
Case
Snapshot
- Applicant:
M/s HMSU Rollers (India) Pvt. Ltd.
- Application No.:
Advance Ruling/SGST & CGST/2024/AAR/06
- AAR Order No.:
GUJ/GAAAR/2025/15
- Date of Ruling:
30.04.2025
Background
of the Case
M/s HMSU Rollers is a
manufacturing company undertaking an expansion project that involves the
installation of a Pre-Engineered Building (PEB) structure designed to
support a 10-ton overhead crane. The PEB includes integrated beams and
supports essential for crane operation.
They received a works
contract service from M/s Shree Steel Building Technology for installation
and erection of the PEB. The company sought clarity on eligibility of ITC
on:
- Steel, cement, and consumables used
in the PEB structure.
- Installation and erection service of
the PEB.
- Other capital goods like crane rails
and electrification used to operate the crane.
Questions
Before AAR
Whether proportionate
ITC is available on:
a) Steel, cement,
consumables used in execution of works contract for constructing an
integrated factory building (PEB) with gantry beam;
b) Installation and
erection services of the PEB used for operating a crane;
c) Capital goods like rails
and electrification used for crane operations.
Applicant’s
Submissions
- The PEB is not merely a building but
functions as plant and machinery since it directly supports an
operational crane.
- The overhead crane cannot
function independently and relies on the load-bearing structure of
the PEB.
- Submitted Chartered Engineer's
certificate showing load analysis to demonstrate that the PEB bears
the crane’s operational load.
- Argued that the PEB structure
qualifies as “plant and machinery” under the Explanation to Section
17(5) and is therefore eligible for ITC.
Legal
Provisions Involved
- Section 17(5)(c):
No ITC for works contract service for immovable property (except
for plant and machinery).
- Section 17(5)(d):
No ITC for goods/services for construction of immovable property on
own account.
- Explanation to Section 17:
Defines “plant and machinery” as equipment fixed to earth, but excludes
civil structures, buildings, land, etc.
Key
Findings by the Authority
a) On Steel, Cement, and
Consumables (Part a)
- The PEB structure is
classified as an immovable property.
- It is a civil structure,
specifically excluded from “plant and machinery”.
- ITC is blocked
under Section 17(5)(c) and (d).
b) On Erection and
Installation of PEB (Part b)
- Classified as a works contract
service under SAC 995441.
- Since the service is for construction
of an immovable structure and not further supplied, ITC is not
allowed.
c) On Crane Rails,
Electrification, etc. (Part c)
- If embedded into the civil structure,
they become immovable property.
- Even if they support machinery, once
embedded in the PEB, ITC is blocked.
Supreme
Court Ruling Relied On
The AAR relied on the
landmark judgment in Safari Retreats Pvt. Ltd. (2024 INSC 756), which
held:
- ITC is blocked if used for construction
of immovable property.
- Only exception: if used for “plant
and machinery” as per defined scope.
- Civil structures/buildings
are not eligible, even if used in business.
Rebuttal to
Tamil Nadu AAAR Decision
The applicant cited a
favorable order in Coral Manufacturing Works India Pvt. Ltd. (TN
AAAR/04/2023). However, the Gujarat AAR rejected this, stating:
- That ruling was pre-Supreme Court
decision in Safari Retreats.
- After the apex court’s ruling and
Finance Act 2025 amendments, no ITC on civil structure works is
permissible.
Final
Ruling
The AAR held that no
Input Tax Credit is admissible on:
|
Component
|
GST
Credit Availability
|
|
a)
Steel, Cement, Consumables used in PEB
|
Not
allowed – Immovable property
|
|
b)
Erection & Installation of PEB
|
Not
allowed – Works contract for immovable property
|
|
c)
Crane rails, electrification, etc.
|
Not
allowed – Becomes part of civil structure
|
Conclusion
This ruling reaffirms the
strict interpretation of blocked credit provisions under Section 17(5)
of the CGST Act. Businesses constructing PEB or similar infrastructure should
note:
- Civil structures,
even if used for operating machinery, are excluded from ITC.
- Works contract services
used to build factory buildings are not eligible, unless the asset
qualifies as plant and machinery per statutory definition.
- Proper classification and structure
planning are crucial to preserve GST credit
eligibility.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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