GST | ITC Not Available On Construction Of Warehouse Used For Storage Or Leasing: Gujarat AAR
Pranav B Prem
The Gujarat Authority for Advance Ruling (AAR) has held that input tax credit (ITC) is not admissible on goods and services used for the construction of a warehouse or shed, even when such warehouse is used for providing 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 in an application filed by a registered GST assessee engaged in providing storage and warehousing services.
The applicant, Premlata Rakesh Jain, operating under the trade name M/s Sambhav Warehousing, is registered under GST and proposed to construct a warehouse for use in the course of business. For this purpose, the applicant intended to procure construction materials such as cement, steel, beams and columns, along with availing construction-related services. The applicant sought an advance ruling on whether ITC would be admissible on such goods and services used for construction of a warehouse from which taxable storage and warehousing services would be provided or which would be leased to tenants.
According to the applicant, ITC on construction expenses should be allowed by treating the warehouse building as “plant” based on its functional use, relying on the Supreme Court’s judgment in Chief Commissioner of Central Goods and Services Tax v. Safari Retreats Pvt. Ltd. The applicant contended that since the warehouse would be used in furtherance of business by providing taxable services, the restriction under Section 17(5) of the CGST Act should not apply.
The Authority examined Sections 17(5)(c) and 17(5)(d) of the CGST Act, 2017, which restrict the availability of ITC on works contract services and on goods or services used for construction of immovable property. The Bench noted that while the Supreme Court in Safari Retreats had applied the functionality test to interpret the expression “plant or machinery” used in Section 17(5)(d), the statutory position has undergone a significant change thereafter.
The AAR observed that Section 124 of the Finance Act, 2025 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 clarifying that for the purpose of clause (d), anything contrary contained in any judgment, decree or order of any court or tribunal shall be deemed never to have applied. The amended provisions were notified to come into force with effect from October 1, 2025.
The Authority noted that under the amended definition, “plant and machinery” expressly excludes land, buildings and other civil structures. As a result, the complete bar on availing ITC for construction of immovable property used in business stands restored. The Bench held that the legislative amendment has nullified the effect of the judgment in Safari Retreats insofar as the interpretation of Section 17(5)(d) is concerned.
Applying the amended provisions, the AAR ruled that ITC on goods such as cement, steel, beams and columns, as well as construction services used for building the warehouse, is blocked, irrespective of whether the warehouse is used for providing taxable storage and warehousing services or is leased out to tenants. The Authority concluded that the applicant is not eligible to avail ITC on such construction-related inputs and services.
Accordingly, answering the question raised, the Gujarat AAR held that ITC is not admissible for the goods or services utilized for the construction of a warehouse or shed from which storage and warehousing services are provided as a furtherance of business or provided on rent, and the application was answered in the negative.
Applicant's Name: Premlata Rakesh Jain
Advance Ruling Number: GUJ/GAAR/R/2025/62
