Articles 14th Oct 2024
The Supreme Court of India has issued a landmark judgment in the Safari Retreats case, introducing a “functionality test” to determine if a building can be considered a ‘plant’ under Section 17(5)(d) of the CGST Act to claim input tax credit. The Apex Court distinguished between “plant or machinery” and “plant and machinery,” upheld the constitutional validity of certain Section 17(5)(c) and 17(5)(d) of the CGST Act and remanded the case to the Orissa High Court for fact-finding.
This ruling has significant implications for businesses claiming ITC on immovable property construction, requiring them to prove that the building is essential to their core operations. The judgment emphasizes a fact-specific approach, potentially leading to variations in how tax authorities and courts apply these concepts to different properties and businesses.
Against this backdrop, our Partner Gopal Krishna Mundhra & Associate Priyadarshini Shekhawat have co-authored an article “Functionality to Dictate Function” published by TIOL PRIVATE LIMITED.
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