TaxTMI 
TaxTMI 
2026 (1) TMI 1054
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....or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling pronounced by the Appellate Authority under Chapter XVII of the Act shall be binding only (a) on the Appellant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the Appellant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear ....
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....agreement for design and construction work for new factory (hereinafter referred to as 'Contract') with M/s. SMCC Construction India Limited. The original Contract sum is INR 90,45,04,483/- (exclusive of GST). The Contract is attached and broadly classified into four categories as given below: S.No. Particulars Amount (exclusive of GST) Remarks 1 Civil Works 49,30,65,352 Site Grading and all civil works related to factory building 2 Pre-engineered building ('PEB') works 27,29,21,237 Supply, fabrication and erection of structural steel works and sheeting works 3 Fire Fighting System ('FFS') 4,65,36,401 Supply, installation, testing and commissioning of fire pump equipment, hydrants, sprinkler system, alarms, extinguishers, etc. 4 Public Health Engineering ('PHE') 1,74,81,313 Sanitary fixtures & fittings, sewage system, water supply system, rain water harvesting system, pumps, etc 3.4 The advance ruling was filed with respect to question on eligibility of ITC on invoices raised pertaining to S.no.3 & 4, namely, Fire-fighting system and Public Health Engineering. The images of the above-said works have been attached as Exh....
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.... Section 16(2) of CGST Act such as possession of tax invoice, receipt of goods/services/both, payment to supplier, etc. 3.8 Since, the eligibility and the conditions for taking input tax credit is established in the aforesaid paragraphs, the Appellant wishes to provide its interpretation on how the said credit is not blocked under the provisions of GST law. Section 17(5) of CGST Act & TNGST Act provides the cases where ITC is inadmissible. Relevant text of Section 17(5) was reproduced for reference - "(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely :- (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; (d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation.- For th....
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.... as immovable property to cover it within the ambit of Section 17(5)(c) and (d) of the CGST Act. The above mentioned items are not imbedded in earth and is movable. The appellant refers to images in Exhibit-3 to show that such procurement are not rooted in the ground/floor rendering it immovable or not possible to be maintained. 3.12 Under this context, the Appellant has brought to note that the AAR interpreted the phrase "deliver the permanent work to the owner" in the Contract as indicative of immovable property. However, the AAR overlooked that the Contract pertains to the construction of an entire factory building. The contract encompasses various components, including civil works, structural steel, fire-fighting systems and public health engineering. In general usage, "permanent work" typically refers to civil structures that are inherently immovable, such as the factory building itself. Other elements covered under this Contract such as fire extinguishers, sprinklers, signage and panel protections are movable apparatuses or machinery that can be relocated with minimal effort or damage. The Appellant had also submitted a photocopy of the same. Therefore, the Appellant has s....
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....Webster's Encyclopedic Unabridged Dictionary of the English Language which reads as under: "a group or aggregate of instruments, machinery, tools, materials etc., having a particular function or intended for a specific use. 2. any complex instrument or machine for a particular purpose. 3. any system or systematic organization of activities, functions, processes, etc., directed toward a specific goal; the apparatus of government; espionage apparatus. 4. Physiol, a group of structurally different organs working together in the performance of a particular function: the digestive apparatus" Accordingly, a group of instruments, tools, materials etc., having a particular function or intended for a specific use at the Plant. Therefore, the fire pump room equipment, hydrant system, panel protection system get covered under the definition of plant and machinery. 3.17 The Appellant referred to the fact that the Impugned Ruling had agreed to the fact that the Firefighting system and Public Health Engineering are correct to be classified as "Apparatus either being fixed to earth or supported through a structure". The Appellant observed that the AAR con....
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....workers are familiar with the means of escape in case of fire and have been adequately trained in the routine to be followed in such cases. (3) The State Government may make rules, in respect of any factory or class or description of factories, requiring the measures to be adopted to give effect to the provisions of sub-sections (1) and (2)". 3.20 Further, the works related to PHE are also mandated under The Factories Act, 1948 read along with The Tamil Nadu Factories Rule, 1950, as amended from time to time. Relevant text from Section 46 of The Factories Act, 1948 was reproduced below for ease of reference: "46. Canteens.- (1) The State Government may make rules requiring that in any specified factory wherein more than two hundred and fifty workers are ordinarily employed, a canteen or canteens shall be provided and maintained by the occupier for the use of the workers. (2) Without prejudice to the generality of the foregoing power, such rules may provide for- (a) the date by which such canteen shall be provided (b) the standards in respect of construction, accommodation, furniture and other equipment of the canteen; ....
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....d CP fittings Yes Before entering production floor, every worker is required to pass through a cleanroom where he is required to wear the appropriate protective gear and wash hands for sanitation purposes. Explanation to sub section V and VI of Section 17 of the CGST Act. Admissible Seeking inference from the above ruling and in comparison, with the Contract, the current supply under question covers the fire detection & alarm system, sewage system, sanitary-ware & fittings and public address systems. Hence, the Appellant contends that the ITC shall be eligible on the same. 3.22 The Appellant has placed reliance on the judgment by the Hon'ble Supreme Court of India that impacts the eligibility of ITC under the GST regime, on the telecommunication towers. In the case of SLP filed by Revenue vide "Commissioner, CGST Appeal-I, Delhi Vs M/s. Bharati Airtel Limited" [2025-VIL-62-SC], the Hon'ble Supreme Court has conclusively ruled on the classification of telecommunication towers. The primary issue was whether telecommunication towers should be considered immovable property under Section 17(5)(d) of CGST Act, 2017 which would make the ITC ineligible. The Hon'ble Delhi ....
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.... of Hon'ble Delhi High Court in the case of Commissioner of Income-Tax Vs. Hindustan Times Limited [1999 (8) TMI 32 - Hindustan Times (Delhi)] wherein, it is held that the assessee is eligible for investment allowance with respect to fire-fighting equipment as the same would fall under plant and machinery. Relevant extract is reproduced below: " ... In so far as the claim of investment allowance on fire-fighting equipment was concerned, the Tribunal found that the fire-fighting equipment was in the industrial undertaking for the purpose of business of the assessee, which is printing and publishing of newspapers and magazines and, therefore, the requirement under Section 32A was satisfied. Accordingly, it allowed the said claim made by the assessee. ........ nature. Similarly, while allowing the claim of the assessee for investment allowance on the cost of fire-fighting equipment, the Tribunal has held that the said equipment formed part of the industrial undertaking for the purpose of business of the assessee of printing and publishing of newspapers and magazines. Again, this finding is not challenged as perverse or unreasonable in the proposed question N....
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....ved in the manufacture of Injection Moulding Machinery and that the fire-fighting system and public health engineering are essential and mandatory as per Tamil Nadu Factories Rules. 4.4 They further submitted that the GST framework constitutes a unified legislation applicable across the entire territory of India, without any state-wise differentiation. Consequently, all State authorities shall apply and interpret the provisions of GST law uniformly without deviation to ensure consistency and eliminate interpretational ambiguities and referred to Gujarat High Court decision in the case of Darshan Boardlam Ltd Versus UOI (2013 (4) TMI 326) and Hon'ble Supreme Court of India in the case of M/s. Birla Corporation Ltd. Versus Commissioner of Central Excise (2005 (7) TMI 717). They also contended that it is a well settled principle of law that when an ambiguity raises in law, benefit must necessarily go in favour of asssessee than for the exemption notification. The Appellant prayed to set aside the impugned ruling and allow the Input Tax Credit. 5. Discussions and Findings: 5.1 We have carefully examined the submissions made by the Appellant in their advance ruling application ....
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....t blocked under Section 17(5)(c) and (d) of the CGST Act, 2017. 5.5 In this regard, we observe that Section 16(1) of the CGST Act, 2017, prescribes the eligibility and conditions for taking ITC, and it states, "(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person." It could be observed from the above, that the most crucial phrase to the entire scheme involving availment of ITC is "used or intended to be used in the course or furtherance of his business". While the said legal provision provides for entitlement of credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business, it also comes up with a rider, viz., "subject to such conditions and restrictions as may be prescribed". 5.6 It may be seen that the provisions of Section 17....
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....stant definition is "used for making outward supply of goods of services or both". 5.8 However, it could be seen from the provisions of section 17(5)(c) of the Act, that the phrase, viz., 'other than plant and machinery', finds a place under the said clause, from which it gets conveyed that availment of ITC on 'plant and machinery' is not blocked under the said provision. It is to be noted here that even the phrase 'other than plant or machinery' that was part of clause (d) of Section 17(5), now stands amended as 'other than plant and machinery', retrospectively with effect from 01.07.2017 onwards, through SI.No.124 of the Finance Act, 2025 (No. 7 of 2025), which reads as below :- "124. In Section 17 of the Central Goods and Services Tax Act, in sub-section (5), in clause (d), - (i) for the words "plant or machinery", the words "plant and machinery" shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017; (ii) the Explanation shall be numbered as Explanation 1 thereof, and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely :- 'Explanation 2.- For the purp....
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....tus. 4. Physiology, a group of structurally different organs working together in the performance of a particular function: the digestive apparatus" 5.11 Accordingly, the Appellant contends that a group of instruments, tools, materials etc., having a particular function or intended for a specific use at the Plant, as in the instant case, the comprehensive installation of Firefighting System and Public Health Equipment involving various items like Hydrant System, Automatic Sprinkler System, Fire Extinguishers, Fire detection and alarm system, Pipelines for waste clearance, etc are meant to perform a specific function and rightly gets covered under the definition of 'plant and machinery'. 5.12 In this regard, we note that the Appellant has entered into a Contract Agreement with M/s. SMCC Construction India Limited, New Delhi for installation of Firefighting System and Public Health Equipment to come up alongside the existing facility at Chembarambakkam, Chennai. Therein, the 'Scope of Work' has been specified as "Supply, Installation, Testing and Commissioning of Industrial Works". Further, under clause (3) to 'Article 1. General Principles' of the General Conditions of....
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....26) as "Immovable Property shall include land, benefits arising out of land and things attached to the earth, or permanently fastened to anything attached to the earth." It could be seen that these installations are normally fastened to the wall or roof of the building which in turn is attached to earth. 5.15 As far as the phrase fixed to earth either by foundation or by structural support' goes, it clearly conveys the fact that the apparatus, equipment or machinery is to be either fixed to earth or supported through a structure. Whereas, the above said installation in the instant case gets assimilated into the building/infrastructure, thereby becoming a part of the immovable property. 5.16 With regard to the phrase 'which are used for making outward supply of goods or services or both', it could be seen that this phrase becomes the most crucial aspect of the definition of Plant and Machinery'. It conveys the fact that even in the event of considering the said installation as an apparatus, equipment or machinery, they should be used for making outward supply of goods or services or both. Since the installations in the instant case does perform a specific function as in the ca....
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.... (2) Object of annexation: If the attachment is for the permanent beneficial enjoyment of the land, the property is to be classified as immovable. Conversely, if the attachment is merely to facilitate the use of the item itself, it is to be treated as movable, even if the attachment is to an immovable property. (3) Intendment of the parties: The intention behind the attachment, whether express or implied, can be determinative of the nature of the property. If the parties intend that the property in issue is for permanent addition to the immovable property, it will be treated as immovable. If the attachment is not meant to be permanent, it indicates that it is movable. (4) Functionality Test: If the article is fixed to the ground to enhance the operational efficacy of the article and for making it stable and wobble free, it is an indication that such fixation is for the benefit of the article, such the property is movable. (5) Permanency Test: If the property can be dismantled and relocated without any damage, the attachment cannot be said to be permanent but temporary and it can be considered to be movable. (6) Marketability Test: If the property....
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....ing when attached to earth, or when fastened to anything attached to earth like wall, roof, etc., become part of immovable property, even if such items can be detached and moved, because they do not have an independent existence. Further, we find that though the Appellant contends that certain procurement vide this Contract such as fire extinguishers, signages, sprinkler system, fire detection & alarm system are movable in nature, such items are not capable of being sold in the market as such, and accordingly fail the 'marketability test'. As far as the Public Health Engineering work is concerned, items like Sanitary fixtures & fittings, pumps, etc., gets assimilated into the immovable property, and other items like sewage system, water supply system, rain water harvesting system, etc., cannot be considered as 'movable' by any means whatsoever, as they very much become part of the immovable property. We, are therefore, of the considered opinion that ITC is not eligible on the installation of Fire-Fighting System and Public Health Engineering work carried out for expansion of factory for manufacturing activity as it is blocked under Sections 17(5)(c) and 17(5)(d) of the CGST/TNGST A....
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....ordingly becomes distinguishable. Further in this regard, we find that the ruling pronounced later by a higher forum, i.e., the Appellate Order dated 04.10.2023 of the Gujarat Appellate Authority for Advance Ruling in the case of M/s. The Varachha Co-op Bank Ltd., have categorically ruled that ITC in relation to firefighting system is ineligible as follows: "the fire safety extinguishers once fitted, no longer remains movable goods as it gets assimilated in a permanent structure i.e. administrative building of the appellant. As the supply and installation of fire safety extinguishers, as pointed out above, makes it an immovable property, it ceases to be plant and machinery. Hence, in view of the above, we find that the appellant is not entitled to ITC of GST paid on Fire Safety Extinguishers in view of the provisions of Section 17(5)(c) of CGST Act, 2017". We are therefore of the opinion that the Ruling cited by the Appellant does not help their cause. 5.26 The Appellant has placed reliance on the judgment by the Hon'ble Supreme Court of India that impacts the eligibility of ITC under the GST regime, on the telecommunication towers. In the case of S....