The Gujarat Authority for Advance Ruling (AAR) has clarified that input tax credit (ITC) under the Goods and Services Tax (GST) law is not available on goods and services used for the construction of warehouses or sheds, even when such structures are used for business purposes.
The ruling is based on Section 17(5)(d) of the Central GST Act, 2017, which blocks ITC on goods or services used for the construction of immovable property, other than plant and machinery, when constructed on one’s own account. The Authority observed that warehouses and sheds qualify as immovable property, as they are permanently attached to the earth and cannot be moved without substantial damage.
The applicant had argued that the warehouse and shed were essential for carrying out taxable business activities such as storage and logistics services. However, the AAR held that the purpose or commercial use of the structure does not override the explicit restriction laid down in the GST law. As a result, GST paid on construction materials, labour contracts, and related services cannot be claimed as ITC.
This ruling reinforces the restrictive approach adopted under GST regarding immovable property and serves as an important clarification for businesses planning infrastructure investments. Taxpayers involved in warehousing, logistics, and industrial operations are advised to factor in the blocked ITC while evaluating project costs and financial planning.
