Eligibility to claim ITC on firefighting and public health equipment for factory expansion held unavailable due to immovable property assimilation.

GST paid on supply and installation of firefighting systems and public health equipment for a factory expansion is ineligible as input tax credit because such installations, being permanently fastened and assimilated into the building, constitute immovable property and do not qualify as plant and machinery used for making outward supplies; consequently GST on the composite works contract is blocked under the statutory exclusions for goods and services forming part of immovable property and for construction services, and therefore ITC on advance invoices for the specific contract cannot be claimed.

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Issues: Whether the GST paid on supply, installation, testing and commissioning of the fire-fighting system and public health engineering for expansion/commissioning of a new factory is eligible as Input Tax Credit or is blocked under Section 17(5)(c) and (d) of the CGST/TNGST Acts; and whether the secondary question on timeline to avail ITC on the advance component requires separate adjudication.

Analysis: The Appellant sought ITC contending the installations constitute "plant and machinery" (apparatus, equipment or machinery) used for making outward supply and/or are movable. The provisions governing entitlement and restrictionsSection 16(1) (entitlement subject to conditions and restrictions) and Section 17(5)(c) & (d) (blocking ITC on works contract services and goods/services for construction of immovable property other than plant and machinery)and the definition of "plant and machinery" (apparatus, equipment and machinery fixed to earth by foundation or structural support and used for making outward supply) are determinative. The contractual scope ('deliver the Permanent Work to the owner') and the cost-abstract show a composite works contract for supply and installation integrated into the factory infrastructure. Applying established tests (nature/object of annexation, intention of parties, functionality, permanency and marketability), the Authority finds the installations become assimilated into the building and serve permanent beneficial enjoyment of the immovable property; several components are tailor-made and not marketable independently. Even where items may be detachable physically, the contract and the manner of integration indicate they form part of immovable property and are not "plant and machinery" for the purposes of Section 17. Given this conclusion, the ITC is blocked under clauses (c) and (d) of Section 17(5). As the primary query is answered against ITC eligibility, the question on timeline for availing ITC on the advance component is rendered academic and need not be answered.

Conclusion: The GST paid on supply, installation, testing and commissioning of the fire-fighting system and public health engineering for the new factory is not eligible as Input Tax Credit and is blocked by Section 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts; appeal dismissed (in favour of Revenue).

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