GST Input Tax Credit on Firefighting and Public Health Systems
The Appellate Authority ruled that firefighting and public health systems fixed to a factory building are immovable property and ineligible for GST input tax credit.
- Ruling
- Order No. AAAR/09/2025 (AR) dated 18.12.2025
- Dated
- 18 Dec 2025
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Firefighting and public health systems are considered immovable property.
- Input tax credit is blocked for construction of immovable property.
- The authority rejected the claim that these systems are movable plant and machinery.
In short
The company asked if they could claim input tax credit on firefighting and public health equipment installed during a factory expansion. The tax authority decided these systems are permanently fixed to the building, making them part of the immovable property. Because the law blocks credit for goods used to construct immovable property, the company cannot claim the tax paid on these items.
What has changed
How it worked before
Businesses often argued that specialized equipment like firefighting systems should be treated as movable plant and machinery, allowing them to claim input tax credit even when installed in a building.
What has changed
The ruling confirms that if equipment is essential to the building's structure and fixed to it, it is treated as immovable property. This means you cannot claim input tax credit on the GST paid for these installations, increasing the total cost of your construction project.
Who this affects
Manufacturing businesses and factory owners undertaking construction or expansion projects.
An example
A textile manufacturer builds a new warehouse and installs a complex sprinkler system. They want to claim the GST paid on the sprinkler components as input tax credit. Based on this ruling, the tax department would likely deny the claim because the system is fixed to the building and essential for its safety, making it immovable property.
What you should do
Review your construction contracts to identify items that may be classified as immovable property. Remember that an advance ruling only binds the specific company that asked for it; it is not a general law that applies to your business. If your tax officer takes a different view, you may need to seek your own professional advice.
If you do nothing
If you claim input tax credit on these items and the tax department disagrees, they may issue a demand notice for the tax amount plus interest and penalties. You could face a lengthy legal dispute to prove your equipment is movable. It is safer to assume these credits are blocked unless you have specific legal advice to the contrary.
The terms explained
- Input Tax Credit
- The tax a business pays on its purchases that it can use to reduce the tax it owes on its own sales.
- Immovable Property
- Assets that are permanently attached to the earth or a building, such as walls, floors, or integrated utility systems.
- Blocked Credits
- Specific categories of purchases where the government does not allow businesses to claim back the GST paid.
The ruling in detail
Appellate Authority for Advance Ruling
M/s. Shibaura Machine India Private Limited
Order No. AAAR/09/2025 (AR) dated 18.12.2025 · Tamil Nadu
Questions before the authority
- Whether Input Tax Credit (ITC) is eligible on firefighting system and public health equipment for expansion of factory for manufacturing activity?
- What should be the basis to arrive the timeline to avail ITC on tax invoice raised by Supplier to bill Advance Component of the Contract?
Facts
The appellant entered into a contract for the design and construction of a new factory, which included civil works, pre-engineered building works, fire-fighting systems, and public health engineering. They sought an advance ruling on the eligibility of Input Tax Credit for the fire-fighting and public health systems, arguing these are movable plant and machinery. The original authority ruled against the appellant, leading to this appeal.
Ruling
| Question | What the authority ruled |
|---|---|
| ITC eligibility on firefighting and public health equipment | Not eligible Blocked under Section 17(5)(c) and (d) as they constitute immovable property |
| Timeline to avail ITC on Advance Component | Does not arise The main query on ITC eligibility was answered in the negative |
The Appellate Authority upheld the original ruling, concluding that the fire-fighting and public health systems are not eligible for Input Tax Credit. It determined that these installations become part of the immovable property upon being fixed to the factory structure. Consequently, the credit is blocked under the provisions of the GST Act.
Reasoning
The authority relied on the **immovable property** test, noting that the installations are fixed to the earth or building structure and are not independent, movable machinery. It held that these systems are **blocked credits** under Section 17(5)(c) and (d) of the CGST/TNGST Act, 2017, as they are used for the construction of immovable property. The authority rejected the appellant's argument that these items qualify as plant and machinery, emphasizing that they are not used directly for making outward supply. It further noted that the **marketability test** was failed as the items are tailor-made for the specific factory facility.
Provisions relied on
- Section 16(1) of the CGST Act, 2017
- Section 17(5)(c) of the CGST Act, 2017
- Section 17(5)(d) of the CGST Act, 2017
- Section 101(1) of the Tamil Nadu Goods and Services Tax Act, 2017
- Section 3(26) of the General Clauses Act, 1897
For the practitioner
This ruling reinforces the strict interpretation that infrastructure components like fire-fighting and public health systems, when integrated into a factory building, are treated as **immovable property** and thus ineligible for ITC. It serves as a warning for practitioners that arguments based on the 'movable' nature of such equipment are unlikely to succeed if the equipment is essential to the building's functionality. It does not provide relief for taxpayers seeking to claim credit on composite works contracts for factory construction.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2026-02/3-shibaura_fire-fighting_systems_aaar_order_09-2025-1.pdf
Legibility of the scan, as read: high.
Prepared 12-10-2026.
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