2026-VIL-190-AAR
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SGST Advance Ruling Authority

GST – Tamil Nadu AAR – Classification of supply, erection, testing and commissioning of fire protection system is a composite supply under Section 2(30) of the CGST Act, 2017 - Applicant, engaged in supply, installation, testing and commissioning of fire protection systems comprising pumps, pipes, valves, hydrants, compressors and allied equipment to private industries and Government institutions, sought a ruling on the nature of the supply - Sample work order showed the Applicant was required to supply the listed items and also to undertake erection, testing and commissioning - Whether the supply of goods together with erection, testing and commissioning constitutes a composite supply - HELD - Section 2(30) defines composite supply as two or more taxable supplies that are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. In the contract for the fire protection system, the supply of goods and the erection, testing and commissioning services are naturally bundled and supplied in conjunction with each other - The supply is held to be a composite supply as defined under Section 2(30) of the CGST Act – Ordered accordingly - Whether fire protection system is movable or immovable property for the purpose of levy of GST - Applicant contended that the system is equipment mounted on an existing civil structure, not permanently attached to the earth and capable of being dismantled and reassembled - Work order required the Applicant to clear the site, build RCC pedestals or platforms, do electric wiring, install pipes, valves and gauges, connect the whole system and carry out testing and commissioning - Whether the fire protection system is to be regarded as movable or immovable property - HELD - The components supplied and installed at the building or premises are intended to provide a permanent fire-protection infrastructure for the facility, and are not meant to be removed and relocated without substantial dismantling. The completed system therefore assumes the character of immovable property for the purpose of levy of GST - The fire protection system is held to be immovable property - Works contract under Section 2(119) of the CGST Act, 2017, classification under SAC 9954 and applicable rate of tax on contract for supply, erection, testing and commissioning of fire protection system - Applicant claimed that the contract is a works contract covered under SAC 9954 and chargeable at 12%, and that the concessional rate for works contract involving predominantly earth work provided to Government is available - Whether the contract qualifies as a works contract under Section 2(119), is covered under SAC 9954 and is chargeable at 12% - HELD - The fire protection system involves transfer of property in goods and erection, testing and commissioning of an immovable property, so the contract assumes the character of a composite supply of works contract under Section 2(119) and is treated as a supply of services under para 6 of Schedule II - Heading 9954 covers construction services, and the electrical installation work falls under SAC 995461 while the firefighting water piping, sprinkler and hydrant network installation falls under SAC 995462 as per the Scheme of Classification of Services. The sample work order requires excavation and backfilling, which are part of earth work, but the charges for the same are a minuscule portion of the total contract amount. The works contract services to Government therefore do not get covered under the entry for works contract involving predominantly earth work, being more than 75 per cent of the contract value, and the 6% rate for intra-State supply sought by the Applicant is not applicable - The contract is held to be a works contract covered under SAC 9954 but not chargeable at 12%.
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