АHMEDABAD, 23.12.2025 : The Gujarat Authority for Advance Ruling has held that input tax credit cannot be claimed on goods and services used for constructing a warehouse or shed, even if the structure is used to provide taxable storage and warehousing services or is leased out for business purposes.
The ruling was delivered by a Bench comprising CGST Member Vishal Malani and SGST Member Sushma Vora on an application filed by a registered GST assessee engaged in storage and warehousing activities.
The applicant, Premlata Rakesh Jain, operating under the trade name M/s Sambhav Warehousing, proposed to construct a warehouse for use in the course of business. For this purpose, she intended to procure construction materials such as cement, steel, beams and columns, and also avail construction-related services. An advance ruling was sought on whether ITC would be admissible on such inputs and services, given that the warehouse would be used to provide taxable services or be leased to tenants.
The applicant argued that ITC should be allowed by treating the warehouse as “plant” based on its functional use. Reliance was placed on the Supreme Court’s judgment in Chief Commissioner of Central Goods and Services Tax v. Safari Retreats Pvt. Ltd., where a functional test had been applied to interpret the scope of “plant or machinery” under the GST law. It was contended that since the warehouse would be used in furtherance of business, the restriction under Section 17(5) of the CGST Act, 2017 should not apply.
The Authority examined Sections 17(5)(c) and 17(5)(d) of the CGST Act, which block ITC on works contract services and on goods or services used for construction of immovable property. While noting the interpretation adopted by the Supreme Court in Safari Retreats, the Bench pointed out that the legal position has since changed.
The AAR referred to Section 124 of the Finance Act, 2025, which amended Section 17(5)(d) by substituting the words “plant or machinery” with “plant and machinery” retrospectively from July 1, 2017. An explanation was also inserted stating that any contrary judgment, decree or order of any court or tribunal shall be deemed never to have applied for the purposes of this clause. These amendments were notified to come into force from October 1, 2025.
Under the amended provision, “plant and machinery” expressly excludes land, buildings and other civil structures. The Authority observed that this amendment restores a complete bar on ITC for construction of immovable property used in business and effectively nullifies the impact of the Safari Retreats judgment on the interpretation of Section 17(5)(d).
Applying the amended law, the AAR held that ITC on goods such as cement, steel, beams and columns, as well as construction services used for building the warehouse, is blocked. This would apply regardless of whether the warehouse is used for providing taxable storage and warehousing services or is leased out.
Accordingly, the Gujarat AAR ruled that the applicant is not eligible to avail ITC on goods or services used for the construction of a warehouse or shed used in the course or furtherance of business. The application was answered in the negative.
Applicant’s Name: Premlata Rakesh Jain
Advance Ruling Number: GUJ/GAAR/R/2025/62
