The Tamil Nadu Authority for Advance Ruling (AAR) has held that Input Tax Credit (ITC) cannot be claimed on the Goods and Services Tax (GST) paid for the installation of fire-fighting systems and public health equipment in factory expansion works.
The bench of C.Thiyagarajan and B.Suseel Kumar has observed that fire-fighting systems and public health equipment, once installed, are permanently affixed to the building structure. The systems cease to remain “movable goods” and therefore cannot qualify as “plant and machinery” under GST law. Instead, they are classified as immovable property.
The applicant, engaged in setting up a new factory building, had sought clarity on whether ITC could be availed on the GST component paid for fire safety installations and public health-related works that were part of the construction contract.
The applicant sought clarification on the treatment of advances paid to contractors and the corresponding eligibility for credit.
Citing Sections 17(5)(c) and 17(5)(d) of the Central GST (CGST) Act and the corresponding State GST (SGST) provisions, the Authority concluded that ITC is specifically blocked on works contracts related to the construction of immovable property, except when such works are directly used for further supply of works contract services.
The AAR ruled that taxes paid on fire-fighting systems and public health equipment used in factory expansion are not available for ITC. Since ITC itself is ineligible, the related question on the timeline for availing ITC on advance components of the contract does not arise.
Ruling Details
Applicant’s Name: Shibaura Machine India Private Limited
Ruling Date: 18.08.2025
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