Tamil Nadu AAR Denies ITC Claim for Electrical Installation in Manufacturing Expansion
The current appeal has been filed by a company named M/s. Shibaura Machine India Private Limited (appellant) in the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai. The company is registered under the GST Act with GSTIN 33AAACL6155E1ZU and possesses a registered address at No.65 (P.O. Box No.5), Chennai-Bangalore Highway, Chembarambakkam, Poonamallee Taluk, Thiruvallur, Chennai-600123.
The company is engaged in the business of manufacturing injection moulding machinery and accessories. The company has thought of increasing its business operations, hence setting up a new factory adjacent to its earlier factory. They spent money on buying things needed to build this new factory. The appellant has also recently taken part in a separate contract with the Supplier for “Supply, installation, testing and commissioning of Electrical Works” for the purposes of establishing its new factory. The aforementioned Electrical works are categorised under SAC 995461 – Electrical installation services, including electrical wiring and fitting services, fire alarm installation services, and burglar alarm system installation services, which are eligible to attract an 18% GST rate.
Questions Asked by Appellant:
The appellant, M/s Shibaura Machine India Private Limited, has asked the following questions, seeking the Tamil Nadu Advance Ruling No. 32/ARA/2025, dated August 18, 2025:
“Question 1: Whether the Input Tax Credit (ITC) is eligible on electrical works carried out for the expansion of a factory for manufacturing activity?
Question 2: What should be the basis to arrive at the timeline to avail ITC on the tax invoice raised by the Supplier to bill “Advance Component” of the Contract and Subsequent Adjustment of Advance in the Service Bills showing both Gross and Net amount.”
What Did the Ruling Say?
In accordance with the Authority for Advance Ruling, Tamil Nadu No. 207, 2nd Floor, Papjm Building, No. 1, Greams Road, Chennai 600 006, the following answers have been given to the above questions under Section 98(4) of the CGST Act, 2017, and under Section 98(4) of the TNGST Act, 2017:
Answer 1: The appellant is not eligible to claim Input Tax Credit (ITC) on the taxes under GST paid on the electrical installation work carried out for the expansion of the factory for manufacturing activity. The authority gave the reason for this disallowance that it is blocked under Sections 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts, 2017.
Answer 2: In answer to this question, the authority has said that there is no need to answer the second question about the timeline for claiming ITC on the ‘advance component’ of this contract, because the main question about claiming ITC (Input Tax Credit) on this contract has already been answered with a ‘no’.
Citation: M/s. Shibaura Machine India Private Limited (AAR Tamil Nadu); Advance Ruling No. 32/ARA/2025; 18/08/2025
