Facts of the Case: The applicant, a manufacturer of injection moulding machinery, undertook expansion by constructing a new factory adjacent to its existing facility. For this purpose, it entered into a contract for supply, installation, testing, and commissioning of Fire-fighting systems (fire pump room, hydrant system, sprinkler system, extinguishers, signages, fire detection and alarm systems, PA systems, protection panels, etc.), and Public health systems (pipelines for waste clearance, sanitary fixtures, sewage and water supply systems, rainwater harvesting, pumps, etc.).

The applicant claimed eligibility to avail Input Tax Credit (ITC) on GST paid for the above works, contending that they qualify as “plant and machinery.”

Issue: Whether ITC is admissible on GST paid on fire-fighting systems and public health equipment installed in a new factory building, or whether it is blocked under Section 17(5)(c)/(d) of the CGST Act, 2017.

Held that:

The AAR ruled as under:

• The systems and equipment in question, though in the nature of apparatus/equipment, become an integral part of the building once installed.
• They are fixed to immovable property and cannot be used independently for making outward supplies.
• Fire-fighting and public health systems, once fitted, lose the character of movable goods and get assimilated into the permanent structure. Consequently, they cease to qualify as “plant and machinery.”
• Therefore, ITC is blocked under Section 17(5)(c) & (d) of the CGST Act, which restricts ITC on works contract services and goods/services used in construction of immovable property.

This AAR continues the strict interpretation of Section 17(5), following earlier rulings that exclude essential safety and utility systems (fire protection, water/sewage, air-conditioning, lifts, etc.) from the scope of “plant and machinery.” While critical for factory operations and compliance with safety laws, such installations are treated as civil infrastructure, not direct production assets.

Case Name: Shibaura Machine India (P.) Ltd., In re^*dated 18.08.2025

To read the complete judgment 2025 Taxo.online 2010