Quick Summary
On October 3, 2024, the Supreme Court ruled that buildings essential for supplying services such as renting may qualify for the "plant" exception under Section 17(5)(d) of the Central Goods and Services Tax (CGST) Act. This provision typically prohibits claiming Input Tax Credit (ITC) for construction materials used for immovable property. However, the Court held that the "functionality test" must be applied to assess whether the building serves as a "plant" for supplying services. The bench, c
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FAQ :
The Supreme Court ruled that buildings essential for providing services, like rental services, may qualify for the 'plant' exception under the CGST Act, allowing for GST Input Tax Credit (ITC) on construction costs.
The 'plant' exception refers to a condition where a building's primary function is to facilitate the supply of services, allowing for ITC on construction materials, which is typically disallowed for immovable property.
The 'functionality test' is used to assess whether a building's primary purpose and operation qualify it as a 'plant' for the purpose of claiming GST ITC on its construction.
Not necessarily. The ruling states that buildings 'essential for supplying services' may qualify. Each case's specific facts will determine eligibility, and the matter has been remitted to the High Court for further assessment.
The case involved M/s. Safari Retreats Pvt. Ltd. seeking ITC on GST paid for constructing a shopping mall intended for rental, which the Orissa High Court had previously supported.
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