2025-VIL-63-KER
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SGST High Court Cases

GST - Construction of an immovable property, Input Tax Credit, Construction of Shopping Mall, Works Contract Services - Petitioner had claimed input tax credit on works contract services for the construction of its shopping mall, which the respondent disallowed on the ground that the output supply was not Works Contract service - Whether the petitioner was eligible to avail input tax credit on the construction of the shopping mall under Section 17(5) of the CGST Act, 2017 - HELD - The Supreme Court in M/s Safari Retreats case considered the scope and purport of Section 17(5) of the CGST Act and held that the expression ‘plant or machinery’ used in section 17(5)(d) of the CGST Act cannot be given the same meaning as the expression ‘plant and machinery’ as defined in the explanation to Section 17. It was further observed that the question whether a mall, warehouse or any building other than a hotel or a cinema theatre can be classified as a plant within the meaning of the expression 'plant or machinery' used in Section 17(5)(d) is a factual question which has to be determined keeping in mind the business of the registered person and the role that building has in the said business. The Court went on to hold that the question of applying the functionality test depends on the facts of each case and the tax officer must decide whether the construction of immovable property is plant for the purpose of clause (d) of sub-section 17(5) of the CGST Act – The observations by the Supreme Court have great significance in the instant case since the petitioner’s contention is that it is eligible to avail the input tax credit in view of the nature of business being carried on - Though the decision in Safari Retreat’s case was rendered subsequent to the order of assessment, the said judgment is declaratory in nature. The impugned order having not considered the impact of the proposition of law as declared in Safari Retreat’s case, renders it perverse - the impugned order is set aside and the respondents are directed to reconsider the matter afresh, bearing in mind the principles laid down in the Safari Retreats case – The writ petition is allowed
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