ITC allowed on capital goods for on-site electricity transmission.

M/s Elixir Industries Private Limited (Elixir), a 100% Export Oriented Unit (EOU) engaged in manufacturing non-woven products, faced a challenge regarding Input Tax Credit (ITC) on capital goods. Elixir required a 1000 KVA power connection and decided to install a 66 KV feeder bay at the GETCO substation. To achieve this, they purchased cables, wires, and other electrical equipment.

Issue-Whether Elixir could claim ITC on these capital goods, given that they were to be transferred to GETCO, a government electricity distribution company, after installation.

Key Points

• Elixir purchased cables, wires, and electrical equipment for installing a 66 KV feeder bay.
• The equipment was to be handed over to GETCO after installation.
• Elixir capitalized the basic value of the equipment and intended to claim ITC on the GST component.
• The question was whether Elixir was eligible for ITC under these circumstances.

The Ruling

After careful consideration, the ruling favored Elixir:

• Eligibility for ITC: Elixir was deemed eligible to claim ITC on the capital goods used for transmitting electricity to their factory premises.
• Conditions for ITC: Elixir had fulfilled the conditions for claiming ITC as per Section 16 of the CGST Act, 2017.
• Blocked Credits: The ITC was not blocked under Section 17(5) of the CGST Act, 2017.

GST Case Law Elixir Industries Private Limited

Citation-2024 TAXONATION 1641 (GUJARAT-AAR)

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