🚨 BIG SHOCK ! ITC Denied on Electricity for Employees — HC Verdict ! #allabouttaxes #camanojgupta

⚖️ BREAKING GST JUDGMENT – ITC Denied on Electricity for Employee Townships! 🚨

In a major ruling, the Chhattisgarh High Court has held that Input Tax Credit (ITC) is not allowable on electricity supplied to residential townships for employees.

This case — Bharat Aluminium Company Ltd. vs. State of Chhattisgarh (2025) — is a landmark decision that clarifies how ITC under Sections 2(17), 16(1), and Rules 42–43 of the CGST Rules must be interpreted.

👉 What Happened?
Bharat Aluminium Company (BALCO) generated electricity from imported coal and used it for:
✅ Manufacturing aluminum at its factory (business use)
✅ Supplying some power to its township for employees (residential use)

The company claimed full ITC of Compensation Cess on coal. The tax department denied ITC for the portion of electricity used in employee housing, calling it “non-business consumption.”

💡 High Court Ruling:
✅ Electricity used in employee quarters is NOT in the course or furtherance of business.
✅ ITC applies only to captive consumption within the factory.
✅ The 2022 amendment to Rule 43 (Explanation 1(d)) is prospective, not retrospective.
✅ Reliance placed on Maruti Suzuki Ltd. and Gujarat Narmada Fertilizers Co. Ltd. — confirming that ITC is a conditional benefit, not an absolute right.

📜 What It Means for Businesses:
This ruling impacts all industrial units maintaining staff quarters or residential facilities — such as mines, steel, and power plants. Electricity, fuel, or input services used for non-manufacturing consumption will not qualify for ITC.

🎙️ As a tax professional with 25+ years of experience, I always emphasize —

“Understand your ITC eligibility — because one wrong claim can cost lakhs!”

💬 Comment below: Should township facilities be treated as part of business expenses?
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📢 Share this with your CA & industry groups — this ruling changes the game!

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