Order Date – 03 October 2024

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

Facts –

• The Respondent, M/s Safari Retreats Private Ltd., has accumulated input credit of GST by the purchase/supply of goods and services consumed and used in the construction of the shopping mall.
• They let out of units in the shopping mall which attracts CGST based on the rent received by them. In order to avail ITC on goods and services consumed and used in the construction of the shopping mall, they were advised to deposit GST on rent without deducting ITC because of the exception carved out by Section 17(5)(d).
• The ITC claim was rejected however The High Court held that if the assessee is required to pay GST on the rental income from the mall, it is entitled to ITC on the GST paid on the construction of the mall. Being aggrieved the revenue filed the writ petition.

Issue –

• Whether the shopping mall can be classified as a plant within the meaning of the expression “plant or machinery” used in Section 17(5)(d?

Order –

• The Hon’ble Apex court observed that the expression “plant and machinery” and “plant or machinery” cannot be given the same meaning. Therefore, if the expression “plant or machinery” is given the same meaning as the expression “plant and machinery” as per the definition contained in the explanation to Section 17, the court will be doing violence to the words used in the statute. While interpreting taxing statutes, it is not a function of the Court to supply the deficiencies.
• It is clear from the explanation in Section 17, which says that plant and machinery means apparatus, equipment and machinery fixed to the earth by foundation or structural support that are used for making outward supply of goods or services or both. The expression includes such foundation and structural support fixed to the earth. However, the definition excludes land, buildings or any other civil structure.
• 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 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, which are 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 Section 17(5) to sub-section (1) of Section 16.
• The writ petitions are rejected subject to the interpretation of clause (d) of sub-section (5) of Section 17 of the CGST Act.