GST: AAR Denies ITC on Firefighting and Public Health Equipment for Factory Expansion

The present appeal has been filed by a company, M/s. Shibaura Machine India Private Limited (appellant), before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai. The company is registered under the GST Act with GSTIN 33AAACL6155E1ZU and has a registered address at No.65 (P.O. Box No.5), Chennai-Bangalore Highway, Chembarambakkam, Poonamallee Taluk, Thiruvallur, Chennai-600123.

The applicant has made a payment of the application fees of Rs. 5,000 each under subrule (1) of Rule 104 of the CGST Rules, 2017, and the SGST Rules, 2017. The appellant is a business involved in the manufacturing of injection moulding machines and related equipment. They are expanding their business and have built a new factory. They additionally signed a separate contract with a supplier for the supply, installation, testing, and commissioning of industrial works for the new factory. This construction work includes civil construction, pre-engineered building work, fire-fighting systems, and public health equipment installation, which attracts a GST rate of 18%.

Questions Asked by Appellant:

The appellant, M/s. Shibaura Machine India Private Limited has asked the following questions, seeking the Tamil Nadu Advance Ruling No. 31/ARA/2025, dated August 18, 2025:

“Question 1. Whether the Input Tax Credit (ITC) is eligible on fire-fighting systems and public health equipment for expansion of the factory for manufacturing activity?

Question 2. What should be the basis to arrive at the timeline to avail ITC on the tax invoice raised by the supplier to bill the “Advance Component” of the contract?”

What Did the Ruling Say?

In accordance with the Authority for Advance Ruling, Tamil Nadu No. 207, 2nd Floor, Papjm Building, No. 1, Greams Road, Chennai 600 006, the following answers have been given to the above questions under Section 98(4) of the CGST Act, 2017, and under Section 98(4) of the TNGST Act, 2017:

Answer 1. No, the appellant is not eligible to claim Input Tax Credit (ITC) on taxes under GST paid on the firefighting system and public health equipment for expansion of the factory for manufacturing activity. For this, the authority gave the reason that it is blocked under Sections 17(5)(c) and 17(5)(d) of the CGST/TNGST Acts, 2017.

Answer 2: In answer to this question, the authority said that the question of what should be the basis to arrive at the timeline to avail ITC on the tax invoice raised by the supplier to bill the “Advance Component” of the contract does not arise, as the appellant is not eligible to claim ITC in the first and main query itself.