2026-VIL-1001-MAD
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SGST High Court Cases

GST - Rejection of Input Tax Credit claim on construction-cum-leasing services under Section 17(5)(d) of the CGST Act, 2017 - Construction not on own account versus construction on own account, Applicability of Supreme Court judgment in Safari Retreats - Petitioner claimed Input Tax Credit on supplies received for construction undertaken with intention to lease the completed properties. The Assessing Authority rejected the ITC claim on the ground that construction for ownership irrespective of subsequent commercial usage falls within Section 17(5)(d) exclusion blocking credit. The Petitioner contended that the assessment orders ignored the Supreme Court judgment in Safari Retreats case - Whether construction of immovable property intended for subsequent leasing or licensing constitutes construction on own account under Section 17(5)(d) - HELD - Supreme Court in Safari Retreats held that construction cannot be said to be on taxable person's own account if intended to be sold or given on lease or license. Construction is on own account only when made for personal use and not as setting where business is carried out - Ineligibility for ITC arises where construction is for personal use of taxable person or used as premises from where business is carried out. By contrast construction intended for sale, lease or license does not fall within own account exclusion. Leasing is independent outward taxable supply arising after completion of construction and cannot retrospectively alter nature of inward supplies during construction – The findings that expression ‘on own account’ includes situations where registered person constructs property for ownership irrespective of subsequent commercial usage and that leasing does not convert blocked credit into eligible credit are contrary to Supreme Court's legal principles. Proper officer should have dealt with Supreme Court judgment before entering findings - The assessment orders rejecting ITC are set aside and the matters are remanded for reconsideration applying correct principles from Safari Retreats judgment - Respondents directed to re-credit or refund amounts debited from electronic cash or credit ledgers as recovery was initiated without compliance with Rule 142B(1) – The writ petitions are disposed of
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