SC dismissed review petition of GST department regarding ITC on shopping mall: Case of Chief Commissioner CGST vs Safari Retreats Private Limited, SC Judgement Dated 20th May 2025. The apex court dismissed a review petition challenging its 3rd October 2024, judgment on the grounds of “no error apparent on the record,” This decision maintains the earlier interpretation of Section 17(5) of the Central Goods and Services Tax (CGST) Act, which pertains to Input Tax Credit (ITC) on immovable properties.
— The original SC judgment, had introduced a ‘functionality test’ for determining ITC eligibility on construction costs of immovable properties. This test aims to ascertain if a property is integral to a business’s operations and plays an essential role in generating taxable supplies. The case stemmed from the respondent being denied ITC on the construction of a shopping mall intended for commercial leasing. The tax authorities had cited Section 17(5)(d) of the CGST Act, which generally blocks ITC on properties constructed ‘on one’s own account’. The SC had remitted the case back to the Orissa High Court for reconsideration. This reconsideration was to be based on whether the shopping mall could be classified as ‘plant’ under the newly introduced functionality test, thereby potentially allowing ITC. This interpretation suggests that if an immovable property is directly linked to taxable activities, such as renting or leasing, it may qualify for ITC.
(Link: SC Judgement Dated 20/05/2025) (Link: SC Judgement Dated 03/10/2024)