Chief Commissioner of Central Goods and Service Tax & Ors. vs M/s Safari Retreats Private Ltd. & Ors.

Held: Constitutional validity of clauses (c) and (d) of s.17(5)and s.16(4) is upheld – Since their plain interpretation does not lead to any ambiguity, they cannot be read down – The expression “plant or machinery” used in s.17(5)(d) cannot be given the same meaning as the expression “plant and machinery” defined by the explanation to s.17 – 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 s.17(5)(d) is a factual question to be determined keeping in mind the business of the registered person and the role that building plays in the said business – If the construction of a building was essential for carrying out the activity of supplying services, such as renting or giving on lease or other transactions in respect of the building or a part thereof covered by clauses (2) and (5) of Schedule II of the CGST Act, the building could be held to be a plant – Then, it is taken out of the exception carved out by clause (d) of s.17(5) to sub-section (1) of s.16 – Functionality test to be applied to decide whether the construction of an immovable property is a “plant” for the purposes of clause (d) of s.17(5) – Impugned judgment in Civil Appeal Nos. 2948 and 2949 of 2023 set aside, writ petitions remanded to High Court for limited purposes of deciding whether, on facts, the shopping mall satisfies the functionality test and is a “plant” in terms of clause (d) of s.17(5) – Further, whether the construction of immovable property carried out by the petitioners in Writ Petitions amounted to “plant” to be decided on merit by applying the functionality test. [Paras 65-67]

Central Goods and Services Tax Act, 2017 – ss.17(5), 16(1), 18(1) – Eligibility and conditions for taking Input Tax Credit(ITC) – Availability of ITC in special circumstances – Non-obstante clause – s.17(5) overrides sub-section (1) of s.16 and s.18:

Held: s.17(5) beginning with a non-obstante clause overrides both sub-section (1) of s.16 and sub-section (1) of s.18 – A non-obstante clause gives an overriding effect to certain provisions over contrary provisions found in the same or some other enactments – Said provision should prevail despite anything to the contrary in the provisions mentioned in the non-obstante clause – In the cases covered by s.17(5), ITC is not available – Thus, sub-section (5) of s.17 carves out an exception to sub-section (1) of ss.16 and 18, which confer the benefit of ITC. [Para 31]

Central Goods and Services Tax Act, 2017 – s.17(5) (c), (d) – Constitution of India – Article 14 – Challenge to constitutional validity on the ground that the test of reasonable classification under Article 14 is not met:

Held: Immovable property and immovable goods for the purpose of GST constitute a class by themselves – Clauses (c) and (d) of s.17(5) apply only to this class of cases – Cases covered by s.17(5)(c), (d) are entirely distinct from the other cases so as not to encroach upon the State’s legislative powers under Entry 49 of List II – ITC cannot be enforced unless there is a statutory provision as the right of ITC is a creation of a statute and is conferred only by the Statute – ITC cannot be claimed as a matter of right unless expressly provided in the statute – Plea of the assessees that the difference is not intelligible and has no nexus to the object sought to be achieved, rejected – The test of vice of discrimination in taxing law is less rigorous – The legislature was dealing with a complex economic problem – Clauses (c) and (d) of s.17(5) cannot be said to be discriminatory. [Paras 58-60]

Central Goods and Services Tax Act, 2017 – s.17(5), Clause (d), (c) – Distinction between – Discussed. Interpretation of Statutes – Taxation Statutes – Interpretation – Principles governing – Discussed.

Words and Phrases – Central Goods and Services Tax Act, 2017 – s.17(5), Clause (d), (c), Explanation; s.7, Schedule II, III; s.102(2) – “plant and machinery”; “plant or machinery”; “plant”; “construction”; “service”; “supply” – Discussed.