ITC on Warehouse Construction Blocked u/s 17(5)

Case Details: Premlata Rakesh Jain, In re [2026] 186 taxmann.com 31 (AAR-GUJARAT)

Judiciary and Counsel Details

Sushma Vora & Vishal Malani, Member
Mehul Pandya, Adv. for the Applicant.

Facts of the Case

The applicant, a GST-registered provider of storage and warehousing services, sought clarity on eligibility of Input Tax Credit (ITC) in respect of cement, steel, beams, columns and works contract services used for the construction of a warehouse or shed intended for storage and leasing activities. It was stated that the applicant was in the process of constructing a warehouse and would procure construction materials and services for the said purpose. The applicant submitted that ITC on construction-related goods and services was earlier treated as blocked under Section 17(5) of the CGST Act, even when used for furtherance of business. The matter was accordingly placed before the Authority for Advance Ruling (AAR).

AAR Held

The AAR held that the eligibility of ITC was required to be examined in light of Section 17(5)(c) and Section 17(5)(d) of the CGST Act read with Section 16 of the CGST Act. It was observed that the Supreme Court in the case of Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd. had distinguished the expression ‘plant and machinery’ under clause (c) from ‘plant or machinery’ under clause (d), and clarified that the statutory explanation excludes land, building or other civil structures. It was further held that warehouse construction using cement, steel, beams, columns and works contract services results in the creation of immovable property in the nature of building or civil structure, which is specifically excluded from the ambit of ‘plant and machinery’ under the explanation to Section 17. It was concluded that ITC on such goods and services is not admissible.