The Tamil Nadu Authority for Advance Ruling held that supply, erection, testing and commissioning of a fire protection system is a works contract under SAC 9954, but not taxable at the 12% rate sought.
A fire protection system installed at a client’s premises becomes immovable property once commissioned, so a contract to supply, erect, test and commission it is a composite supply of works contract under Section 2(119) of the CGST Act [In Re: Samay Project Services Ltd., 2026-juristway.com-3191-AAR(Tamilnadu)-GST].
The ruling was given by R.V. Pradhamesh Bhanu, Member (CGST), and B. Suseel Kumar, Member (SGST), on an application by a Chennai company that supplies pumps, pipes, valves, hydrant components, compressors and sprinklers, and installs and tests them.
The applicant argued that the system was not permanently attached to the earth, was mounted on the recipient’s existing structure and could be dismantled. It said the dominant intention of its contracts was the supply of goods, with installation only enabling their use. It also sought a 5% IGST rate for supplies to government institutions such as the BCG Vaccine Laboratory and SDSC SHAR, Sriharikota.
The Authority examined a sample work order from the Satish Dhawan Space Centre. It required the applicant to clear bushes and trees, build RCC pedestals and platforms, carry out electrical wiring, install the piping and valves, and then test and commission the system. Goods and services were naturally bundled, making the contract a composite supply under Section 2(30).
On the nature of the system, the Authority found that the components formed permanent fire-protection infrastructure that could not be relocated without substantial dismantling. “The completed system therefore assumes the character of an immovable property for the purpose of levy of GST.”
The contract was therefore a works contract treated as a supply of services under paragraph 6 of Schedule II. Electrical and fire alarm installation fell under SAC 995461, and firefighting water piping, sprinkler and hydrant work under SAC 995462, both within Heading 9954.
The concessional rate under entry 3(vii) of Notification No. 11/2017-Central Tax (Rate) was not available. That entry covers works contracts for government bodies involving predominantly earth work, meaning over 75% of the contract value. Although the work order included excavation and backfilling, those charges were a minuscule part of the contract.
The remaining questions were answered in the negative. Clause (vi) of Sl. No. 3 of Notification No. 8/2017-Integrated Tax (Rate) had been omitted by Notification No. 3/2022-Integrated Tax (Rate), and Notification No. 47/2017-Integrated Tax (Rate) had been rescinded by Notification No. 11/2022-Integrated Tax (Rate), so the 5% claim did not survive.
The ruling states that the contract is not taxable at 12% but does not specify the rate that applies instead.
2026-juristway.com-3191-AAR(Tamilnadu)-GST
