Block credit on paints, fabrication works on main building of factory of medicine manufacturer
Does the input ITC on special paints, fabrication works on ss furniture, racks in warehouse, main building of medicine manufacturer be eligible on being considered as plant by the taxpayer and thus not falling under block credit of 17(5) cgst act 2017.
As per Section 17 of CGST Act 2017, the plant and machinery is defined as below-
Explanation.- For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises.
In my opinion, special paints, fabrication works on ss furniture, racks in warehouse and main building of medicine manufacturer are not part of plant and machinery.
Coming to the eligibility of ITC part, as per Section 17(5) of CGST Act 2017, the ITC is blocked only to the extent of capitalisation. So if the taxpayer does not capitalise paint, racks and fabrication work on furniture and shows it as expense, the ITC is not blocked as per Section 17(5). The ITC is blocked only if the taxpayer has capitalised those invoices in his books. For the construction of main building, the taxpayer must have capitalised it and it is straight away ineligible.
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