Circular, 2024

Text

Reproduced from the document India Code holds for this instrument. The Gazette prints Hindi and English side by side and this is the English; the Department's own PDF remains the authority.

Cintufoy no — 2495019 .

Office of the Commissioner, State Tax, Uttar Pradesh (GST Section) Letter No. GST/2024-25/ A7 /State Tax Lucknow: Dated: 0% July, 2024 To, All Zonal Additional Commissioner Grade -1, Additional Commissioner Grade -2 (S.I.B.) State Tax, Uttar Pradesh.

Subject: Clarification on availability of input tax credit on ducts and manholes used in network of optical fiber cables (OFCs) in terms of section 17(5) of the UPGST Act, 2017 - reg.

Representations have been received from Cellular Operators Association of India (COAI) submitting that input tax credit (ITC) is being denied by some tax authorities on ducts and manholes used in network of optical fiber cables (OFCs)on the ground that the same is blocked as per section 17(5) of the Uttar Pradesh Goods éLServices Tax Act, 2017 (herein after referred to as the ‘UPGST Act”), being in nature of immovable property (other than Plant and Machinery). It has been requested to issue clarification in respect of availability of ITC on ducts and manholes used in network of optical fiber cables (OFCs), so as to prevent unwarranted litigation in the telecommunication sector across the country.

2. In order to ensure uniformity in the implementation of the provisions of law across the field formations, the Commisssioner, in exercise of its powers conferred by section 168 of the UPGST Act, hereby clarifies the issue as below.

Issue Clarification Whether the input tax credit 1. Sub-section (5) to Section 17 of the UPGST Act| on the ducts and manholes| provides that input tax credit shall not be available,| used in network of optical| inter alia, in respect of the following: fiber cables (OFCs) for providing telecommunication services is barred in terms of clauses (c) and (d) of sub- section (5) of section 17 of the UPGST Act, read with Explanation to section 17 of UPGST Act ? i. works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; or ii. goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

2. Explanation in section 17 of UPGST Act provides that the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes land, building or any other civil structures; telecommunication towers; and pipelines laid outside the factory premises.

3. Ducts and manholes are basic components for the optical fiber cable (OFC) network used in providing telecommunication services. The OFC network is generally laid with the use of PVC ducts/sheaths in which OFCs are housed and service/connectivity manholes, which serve as nodes of the network, and are necessary for not only laying of optical fiber cable but also their upkeep and maintenance. In view of the Explanation in section 17 of the UPGST Act, it appears that ducts and manholes are covered under the definition of “plant and machinery” as they are used as part of the OFC network for making outward supply of transmission of telecommunication signals from o ne point to another. Moreover, ducts and manholes used in network of optical fiber cables (OFCs) ha ve not been specifically excluded from the definition of “plant and machinery” in the Explanation to secti on 17 of UPGST Act, as they are neither in nature of land, building or civil structures nor are in na ture of telecommunication towers or pipelines laid outsi de the factory premises.

4. Accordingly, it is clarified that availment of inpu tax credit is not restricted in respect of such ducts a nd) manhole used in network of optical fiber cables| (OFCs), either under clause (c) or under clause (d) of| sub-section (5) of section 17 of UPGST Act.

3, Tt is requested that suitable trade notices may be issued to publicize the contents of this Circular.

4. Difficulty, if any, in the implementation of this Circula r may be brought to the notice of the Underdsigned.

By Order.

Commissioner, State Tax, U.P.

Copy To:

1. Joint Commissioner (1.T.), State Tax HQ, Lucknow for up loading the Circular on the Departmental Website.

Joint Commissioner(GST) State Tax HQ, Lucknow.

Provisions this circular answers to

Read out of the instrument itself: an enabling provision is one it says it was made under, which is the power it rests on. The rest it names without resting on.

Other instruments under the same Act

All of the The Uttar Pradesh Goods and Services Tax Act, 2017