What was the question before the AAR?

Whether the applicant can claim input tax credit on GST charged by works contractors to the extent of machine foundation.

What did the AAR hold in Vijayneha Polymers?

ITC is available on works contract services to the extent they relate to machine foundation, treated as part of plant and machinery.

Which provision did the AAR consider?

Section 17(5) of the CGST Act and the definition of plant and machinery, which includes foundation and structural support.

Why is machine foundation eligible?

Because foundation is integral to plant and machinery used in business; hence ITC is not blocked for that portion.

Does this mean all construction ITC is allowed?

No. Only the part tied to plant and machinery (like machine foundations) qualifies; civil building construction may still be blocked.

In Re Vijayneha Polymers Private Limited (GST AAR Telangana)

AAR Telangana 2021 11 Dec 2021 GST / ITC ~6 min India

Author: Gulzar Hashmi • Publish Date: 02 Nov 2025

PRIMARY_KEYWORDS: ITC on machine foundation; plant and machinery; Section 17(5) CGST | SECONDARY_KEYWORDS: works contract; factory building; AAR Telangana; GST input credit

Slug: in-re-vijayneha-polymers-private-limited-gst-aar-telangana

```

Quick Summary

The AAR Telangana held that input tax credit (ITC) is available on works contract services to the extent of machine foundation. The foundation is part of plant and machinery used for business, so the ITC block in Section 17(5) does not apply to that portion.

Forum: AAR Telangana 11 Dec 2021 Plant & Machinery

Issues

Can the applicant claim ITC on GST charged by works contractors for machine foundation?
Is machine foundation covered as part of plant and machinery for Section 17(5) purposes?

Rules

Section 17(5), CGST Act — Restricts ITC on certain works contracts relating to immovable property; but does not block ITC for plant and machinery (including foundation and structural support).
Definition of Plant & Machinery — Includes foundation and structural supports used for installation of apparatus/equipment used for business.

Facts (Timeline)

Timeline image for Vijayneha Polymers AAR case

Applicant manufactures plastic products; built a factory building.

Engaged works contractors (material + services); paid GST on services.

Sought ruling on ITC for machine foundation cost component.

Argued foundation is integral to business use and plant & machinery.

AAR ruled in favour of ITC to the extent of machine foundation.

Arguments

Applicant

Machine foundation is integral to operating the plant.
Falls within plant & machinery including foundation/supports.
Therefore, ITC on that portion should be allowed.

Revenue Perspective

Works contract for immovable property generally blocked under Section 17(5).
Need to verify the extent that relates to plant & machinery vs civil construction.

Judgment

The AAR held that the applicant is entitled to ITC on GST charged by works contractors to the extent of the machine foundation. Since foundation forms part of plant & machinery, the Section 17(5) restriction does not apply to that specific portion.

Ratio

Foundation = Plant & Machinery: Where works contract costs relate to foundation/structural support of machinery used in business, ITC is allowed for that part.

Why It Matters

Gives capital project clarity on ITC split between civil works and machinery.
Helps manufacturers plan cost allocation and documentation.
Exam tip: apply the plant & machinery carve-out under Section 17(5).

Key Takeaways

ITC allowed on machine foundation.

Section 17(5) carve-out for plant & machinery.

Keep evidence to prove allocation.

Civil works ITC may still be blocked.

Mnemonic + 3-Step Hook

Mnemonic: “Fix the Base, Claim the Credit.”

Fix — Is it foundation/support for machinery?
Base — Falls inside plant & machinery definition.
Credit — ITC allowed for that portion under Section 17(5).

IRAC Outline

Issue

Is ITC available on works contract services for machine foundation?

Rule

Section 17(5) blocks civil construction ITC but excludes plant & machinery (incl. foundation/support).

Application

Foundation supports machines used for production; hence within the exclusion.

Conclusion

ITC allowed to the extent of machine foundation.

Glossary

ITC (Input Tax Credit): Credit of GST paid on inputs/input services used in the course of business.
Works Contract: Composite supply for building/construction/installation jobs involving goods and services.
Plant & Machinery: Includes foundation/structural support for machines used for business operations.