Circular No.: 219/13/2024-GST
Date of Circular: 26th June 2024
Relevant Sections and Rules:
- CGST Act, 2017:
- Section 17(5)(c) and 17(5)(d): Blocked ITC on immovable property
- Explanation to Section 17: Definition of “plant and machinery”
- Section 168(1): Power to issue instructions
Clarification on Availability of ITC on Ducts and Manholes Used in OFC Networks
- Background – Issue Raised by COAI:
The Cellular Operators Association of India (COAI) reported denial of ITC on ducts and manholes used in optical fiber cable (OFC) networks by tax authorities, citing Section 17(5) (blocked credit for immovable property). - Legal Analysis and Clarification:
- As per Section 17(5)(c) and (d), ITC is disallowed on:
- Works contract or construction of immovable property (other than plant and machinery), and
- Goods/services used for own-account construction of immovable property.
- However, the Explanation to Section 17 defines plant and machinery to include:
- Apparatus, equipment, and machinery fixed to earth for making outward supply,
- Along with their foundations and structural supports,
- Excluding land, buildings, civil structures, telecom towers, and pipelines outside factory premises.
- Ducts and manholes used in OFC networks:
- Are integral components of the telecommunication supply infrastructure,
- Are not civil structures, telecom towers, or pipelines,
- Are used to house and maintain optical fiber cables, facilitating signal transmission.
➤ Conclusion: Ducts and manholes fall under “plant and machinery” and are not excluded by the statutory definition.
- Final Clarification:
ITC is not barred under clauses (c) or (d) of Section 17(5) for ducts and manholes used in OFC networks.
➤ Telecommunication companies are eligible to avail input tax credit on such goods and services.
Source: Circular No.: 219/13/2024-GST
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