Holding

Clause (d) of Section 17(5) uses ‘plant or machinery’ with a meaning distinct from the defined ‘plant and machinery’; a building may be treated as a plant only if it satisfies the functionality test, and the constitutional validity of clauses (c) and (d) of Section 17(5) and Section 16(4) is upheld.

Summary

The appellant, M/s Safari Retreats, constructed a shopping mall and accumulated input tax credit (ITC) on the inputs used for construction, but was denied ITC on the GST payable on rental income because Section 17(5)(d) of the CGST Act blocks credit for construction of immovable property on the taxpayer's own account. The High Court read down the provision and allowed the ITC, prompting the Central Commissioner of Central GST to appeal. The Supreme Court examined whether the definition of “plant and machinery” in the explanation to Section 17 applies to the phrase “plant or machinery” in clause (d), what “plant” means, and whether clauses (c) and (d) of Section 17(5) and Section 16(4) are unconstitutional. The Court held that “plant or machinery” cannot be given the same meaning as “plant and machinery”; a building can be treated as a plant only if it satisfies a functionality test, and the constitutional validity of the provisions is upheld. Consequently, the Court set aside the High Court’s judgment, remanded the matter for a factual determination of whether the mall qualifies as a plant, partially allowed the appeals and rejected the writ petitions.

Issues considered

Whether the definition of “plant and machinery” in the explanation to Section 17 applies to the expression “plant or machinery” used in clause (d) of Section 17(5).
If the definition does not apply, what is the meaning of the word “plant” in clause (d) of Section 17(5).
Whether clauses (c) and (d) of Section 17(5) and Section 16(4) of the CGST Act are unconstitutional under Articles 14, 19(1)(g) and 300A of the Constitution.
Whether the functionality (or essentiality) test should be applied to decide if an immovable property is a “plant” for the purpose of ITC eligibility.
Whether the non‑obstante clause in Section 17(5) overrides the provisions of Section 16(1) and Section 18(1).

Legislation cited

Central Goods and Services Tax Act, 2017s. 16(1), s. 16(3), s. 16(4), s. 17(5), s. 17(6), s. 18(1), s. 18(6), s. 2(102), s. 54(3), s. 7, s. 9
Constitution of Indias. Article 14, s. Article 19(1)(g), s. Article 300A, s. Schedule VII List II Entry 49
Finance Act, 2022
Tamil Nadu Value Added Tax Act, 2006

Subjects

Goods and Services TaxSection 17(5) clauses (c) and (d)Input Tax CreditPlant or machinery definitionNon‑obstante clauseFunctionality testConstitutional validityArticle 14Article 19(1)(g)Article 300AImmovable propertyWorks contractRental incomeTaxation statutes interpretation

Judgment

[2024] 10 S.C.R. 793 : 2024 INSC 756

Chief Commissioner of Central Goods and
Service Tax & Ors.
v.
M/s Safari Retreats Private Ltd. & Ors.
(Civil Appeal No. 2948 of 2023)
03 October 2024
[Abhay S. Oka* and Sanjay Karol, JJ.]

Issue for Consideration
Whether the definition of “plant and machinery” in the explanation
appended to Section 17 of the Central Goods and Services Tax
Act, 2017 applies to the expression “plant or machinery” used
in clause (d) of sub-section (5) of Section 17; if it is held that
the explanation does not apply to “plant or machinery”, what
is the meaning of the word “plant”; and whether clauses (c)
and (d) of Section 17(5) and Section 16(4) of the CGST Act are
unconstitutional.

Headnotes†
Central Goods and Services Tax Act, 2017 – s.17(5)(c), (d),
s.16(4) – Constitutional validity – Challenge to – Eligibility and
conditions for taking Input Tax Credit (ITC) – Apportionment of
blocked credits – Whether the construction of an immovable
property is a “plant” for the purposes of s.17(5)(d) – Shopping
mall in question, if was a “plant” – Plea of the assessees inter
alia that they were not able to avail the credit on GST paid
on goods and services used in the construction of buildings
etc. against the GST received for the renting/letting out etc.
of the premises – High Court held that if the assessees were
required to pay GST on the rental income from the mall, they
were entitled to ITC on the GST paid on the construction of
the mall – Correctness:
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

* Author
794 [2024] 10 S.C.R.

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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)
[2024] 10 S.C.R. 795

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

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.

Case Law Cited
CIT, Trivandrum v. Anand Theatres [2000] 1 Supp. SCR 338 :
(2000) 5 SCC 393 – held inapplicable.
Eicher Motors Limited & Anr. v. Union of India & Ors [1999] 1 SCR
295 : (1999) 2 SCC 361; Bharat Sanchar Nigam Limited & Anr. v.
Union of India & Ors. [2006] 2 SCR 823 : (2006) 3 SCC 1; Shreya
Singhal v. Union of India [2015] 5 SCR 963 : (2015) 5 SCC 1;
Union of India v. Bharti Airtel Limited & Ors. (2021) SCC OnLine
SC 1006; Federation of Hotel & Restaurant Association of India, etc.
v. Union of India and Ors. [1989] 2 SCR 918 : (1989) 3 SCC 634;
Twyford Tea Co. Ltd. and Anr. v. State of Kerala and Anr. (1981) 4
SCC 675; Union of India and Ors. v. Nitdip Textile Processors Pvt.
Ltd. and Anr. [2011] 13 SCR 26 : (2012) 1 SCC 226; Government
of Andhra Pradesh and Ors. v. P. Laxmi Devi [2008] 3 SCR 330 :
(2008) 4 SCC 720; Assistant Commissioner of Urban Land Tax
and Ors. v. Buckingham and Carnatic Co. Ltd., Etc. [1970] 1 SCR
268 : (1969) 2 SCC 55; Jindal Stainless Ltd. and Anr. v. State of
Haryana and Ors. [2016] 10 SCR 1 : (2017) 12 SCC 1; State of
796 [2024] 10 S.C.R.

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Tamil Nadu and Anr. v. National South Indian River Interlinking
Agriculturist Association [2021] 7 SCR 479 : (2021) 15 SCC 534;
Sanjeev Coke Manufacturing Company v. M/s Bharat Coking Coal
Ltd. & Anr. [1983] 1 SCR 1000 : (1983) 1 SCC 147; Union of India
& Anr v. Mohit Minerals Pvt. Ltd. [2022] 9 SCR 300 : (2022) 10 SCC
700; Indian Social Action Forum (INSAF) v. Union of India [2020]
4 SCR 903 : (2021) 15 SCC 60; Delhi Transport Corporation v.
DTC Mazdoor Congress & Ors. [1990] Supp. 1 SCR 142 : (1991)
Supp (1) SCC 600; Indcon Structurals (P) Ltd. v. Commissioner
of Central Excise, Chennai [2006] Supp. 1 SCR 11 : (2006) 4
SCC 786; CIT, Andhra Pradesh v. Taj Mahal Hotel, Secunderabad
[1972] 1 SCR 168 : (1971) 3 SCC 550; Commissioner of Income
Tax, Karnataka v. Karnataka Power Corporation (2002) 9 SCC 571;
Commissioner of Income Tax v. Victory Aqua Farm Ltd. (2016) 16
SCC 553; Commissioner of Customs (Import), Mumbai v. Dileep
Kumar & Company & Ors. (2018) 9 SCC 1; Sneh Enterprises v.
Commissioner of Customs, New Delhi [2006] Supp. 5 SCR 817 :
(2006) 7 SCC 714; Commissioner of Income Tax, West Bengal 1,
Calcutta v. M/s Vegetables Products Ltd. [1973] 3 SCR 448 :
(1973) 1 SCC 442; R.S. Raghunath v. State of Karnataka & Anr.
[1991] Suppl. 1 SCR 387 : (1992) 1 SCC 335; Union of India &
Ors v. VKC Footsteps India Pvt. Ltd. [2021] 15 SCR 169 : (2022) 2
SCC 603; ALD Automotive Pvt. Ltd. v. Commercial Tax Officer,
now upgraded as Assistant Commissioner (CT) & Ors. [2018] 13
SCR 217 : (2019) 13 SCC 225; Hari Krishna Bhargav v. Union of
India & Anr [1966] 2 SCR 22 : (1966) 2 SCR 22; Joseph Shine
v. Union of India [2018] 11 SCR 765 : (2019) 3 SCC 39; Indore
Development Authority v. Manoharlal & Ors. [2020] 3 SCR 1 :
(2020) 8 SCC 129; State of Bombay v. R.M.D. Chamarbaugwala
& Anr. [1957] 1 SCR 874 : (1957) SCC OnLine SC 12; Union of
India v. Shri Harbhajan Singh Dhillon [1972] 2 SCR 33 : (1971) 2
SCC 779; India Cement Ltd. & Ors. v. State of Tamil Nadu & Ors.
[1989] Supp. 1 SCR 692 : (1990) 1 SCC 12; State of W.B. v.
Kesoram Industries Ltd. & Ors. [2004] 1 SCR 564 : (2004) 10 SCC
201; Commissioner of Central Excise, Ahmedabad v. Solid and
Correct Engineering Works & Ors. [2010] 4 SCR 476 : (2010) 5
SCC 122 – referred to.

List of Acts
Central Goods and Services Tax Act, 2017; Tamil Nadu Value
Added Tax Act, 2006; Finance Act, 2022; Constitution of India.
[2024] 10 S.C.R. 797

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

List of Keywords
Goods and Services Tax; Clauses (c) and (d) of Section 17(5)
and Section 16 of the Central Goods and Services Tax Act, 2017;
Input Tax Credit (ITC); Exception; Non-obstante clause; Shopping
mall; Hotels; Warehouses; Building; Cinema; Construction of
immovable property; “plant and machinery”; “plant or machinery”;
“plant”; “construction”; Supply of service; Land and buildings;
Works contracts; Immovable property; Immovable goods; Capital
goods; Constitutional validity challenged; Reading down; Intelligible
differentia; Test of reasonable classification; Vice of discrimination;
Discriminatory; Unconstitutional; Functionality test; Taxation
Statutes; Renting; Leasing; Letting out; Rental income; Articles 14,
19(1)(g), 300A; List II of Schedule VII of the Constitution of India.

Case Arising From
CIVIL APPELLATE/ORIGINAL JURISDICTION: Civil Appeal No.
2948 of 2023
From the Judgment and Order dated 17.04.2019 of the High Court
of Orissa at Cuttack in WPC No. 20463 of 2018
With
Writ Petition (Civil) Nos. 804 and 1030 of 2022, Civil Appeal No.
2949 of 2023, Writ Petition (Civil) Nos. 1036 of 2022, Writ Petition
(Civil) Nos. 90, 846 and 847 of 2023

Appearances for Parties
N. Venkataraman, A.S.G., Arijit Prasad, Arvind P. Datar, Mukul Rohatgi,
Abhratosh Majumdar, V. Raghuraman, Vikram Nankani, Tarun Gulati,
Sr. Advs., Inderjit Prasad, Mukesh Kumar Maroria, Rupesh Kumar,
S.A. Haseeb, Mohd. Akhil, Ms. Swarupama Chaturvedi, T.S. Sabarish,
Lalit Mohan, Ms. Sonu Bhatnagar, V.Chandrashekara Bharati, Ms.
Amritha Chandramouli, Rahul Vijay Kumar, Shivshankar G., Ms.
Shruti Shivkumar, Ms. Monica Benjamin, Ms. Nishtha Mittal, Saurabh
Chaudhary, Vijaya Nand Tripathi, Ms. Ankita Anilkumar Singh, Vipin
Jain, Vinay Saraf, Vishal Agrawal, Sasi Prabhu, Ravi Bharuka, Ankit
Agarwal, Abhishek Deodhar, Rahul Unnikrishnan, Ms. Ritu Jain, Ms.
Aditi Jain, Sujit Ghosh, Ms. Mannat Waraich, Ms. Anshika Agarwal,
Ms. Priyanka Rathi, Ms. Ashwini Chandrasekaran, Ms. Shubhangi
Gupta, Abhishek A. Rastogi, Nikhil Jain, Pratyushprava Saha,
798 [2024] 10 S.C.R.

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Ms. Divya Jain, Ms. Meenal Songiri, Ms. Ranjeeta Rohatgi, Vinod
Kumar Jain, Ms. Pooja M Rastogi, Ms. Monica Dhingra, Ms. Meenal
Songire, Ashwini Kumar, Pallav Mongia, Vijay Deora, Jayesh Gupta,
Ajay Singh, Shubham Singh, Renita Alex, Avra Majumdar, Ramesh
Patodia, S Sukumaran, Anand Sukumar, Mrs. Megha Agarwal,
Bhupesh Kumar Pathak, Mrs. Ruche Anand, Mrs. Meera Mathur,
Suvendu Suvasis Dash, Ms. Swati Vaibhav, Ms. Shruti Vaibhav,
Priyonkoo Anjan Gogoi, Ms. Nitya Thakur, Rajasmit Mondal, Shivam
Saini, Prasenjeet Mohapatra, Avra Mazumder, Bhupesh Pathak,
Vinay Shraff, Vishal Aggrawal, Ms. Tuhina Sinha, Bhanumurthy J, C
R Raghavendra, Mrs. Sandhya Raghuraman, Shivam Batra, Sparsh
Bhargava, Ms. Ishita Farsaiya, Rahul Jain, Kishore Kunal, Ms. Ankita
Prakash, Naresh Jain, Ms. Arti Singh, Alok Kumar, Vikas Mehta, J.K.
Mittal, Ms. Vandana Mittal, Ms. Aashna Suri, Nagarkatti Kartik Uday,
Mahaveer Jain, Rameshwar Prasad Goyal, Vishal Aggarwal, Ankit
Kanodia, Advs. for the appearing parties.
Judgment / Order of the Supreme Court
Judgment
Abhay S. Oka, J.
FACTUAL ASPECTS
1. The issues which broadly arise in this group of matters concern
clauses (c) and (d) of sub-section (5) of Section 17 of the Central
Goods and Services Tax Act, 2017 (“the CGST Act”). There is a
challenge to the constitutional validity of the said provision. There
is a prayer for reading down the said provision.
2. In Civil Appeal Nos. 2948 and 2949 of 2023, the first respondent is
engaged in the construction of a shopping mall for the purpose of
letting out premises in the malls to different tenants. Vast quantities of
material, inputs and services are required for the construction of the
malls in the form of cement, sand, steel, aluminium, wires, plywood,
paint, lifts, escalators, air-conditioning plants, electrical equipment,
transformers, building automation systems etc., and also consultancy
services, architectural services, legal and other professional services,
engineering services and other services including the services of a
special team of international designers specialised in the construction
of Malls. These goods and services used in the construction of
the mall are taxable under the CGST Act. It is the case of the first
[2024] 10 S.C.R. 799

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

respondent that it has accumulated input credit of GST amounting
to more than Rs. 34 crores by the purchase/supply of goods and
services consumed and used in the construction of the shopping
mall. At the same time, the first respondent’s letting out of units in
the shopping mall attracts CGST based on the rent received by the
first respondent since it amounts to the supply of service under the
CGST Act. Therefore, the first respondent was desirous of availing
the Input Tax Credit (ITC) accumulated against the rental income
received by it upon letting out the mall premises. According to the
first respondent, when it approached the concerned authorities, it
was advised to deposit GST on rent without deducting ITC because
of the exception carved out by Section 17(5)(d).
3. The first respondent filed a writ petition before the High Court of Orissa
seeking a declaration that Section 17(5)(d) of the CGST Act and the
corresponding provisions of the Orissa Goods and Services Act, 2017
do not apply to the construction of immovable property intended for
letting out on rent. A prayer in the alternative was made that in the
event it is held that the bar under Section 17(5)(d) is applicable even
to the construction of immovable property intended for letting out, a
declaration be issued that Section 17(5)(d) is violative of Articles 14
and 19 (1)(g) of the Constitution of India. A consequential prayer was
made to issue a writ of mandamus to enjoin the present appellants,
who were respondents in the writ petition, to grant the benefit of ITC
to the first and second respondents.
4. By the impugned judgment dated 17th April 2019, the High Court
held that in view of the decision of this Court in the case of Eicher
Motors Limited & Anr. v. Union of India & Ors.,1 Section 17(5)(d)
was required to be read down as the very purpose of ITC is to benefit
the assessee. 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. It was held that the
narrow interpretation given by the Department to Section 17(5)(d)
would frustrate the very object of the Act. Civil Appeal No. 2949 of
2023 takes exception to the same judgment.
5. In the Writ Petitions, the petitioners contend that due to the restrictions
imposed by Section 17(5)(c) and Section 17(5)(d) of the CGST

1 [1999] 1 SCR 295 : (1999) 2 SCC 361
800 [2024] 10 S.C.R.

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Act, they are unable to avail the credit on GST paid on goods and
services used in the construction of factory premises, buildings etc
against the GST received by them for the renting/leasing/letting out
etc. of the premises. GST is being recovered on the supply of goods
and services used in the construction of commercial office buildings,
and GST is also being recovered on rentals collected. Accordingly,
several writ petitions have been preferred seeking the following reliefs:
a. Writ Petition (C) No. 90 of 2023 challenging clauses (c) and (d)
of Section 17(5) of the CGST Act to the extent to which it
excludes works contract services and goods from ITC. It is
also prayed that the bar imposed by Section 16(4) should not
apply to the petitioner;
b. Writ Petition (C) No. 804 of 2022 challenging the validity of
Section 17(5)(d) of the CGST Act;
c. Writ Petition (C) No. 846 of 2023 challenging the validity of
clauses (c) and (d) of Section 17(5) of the CGST Act. There is
another prayer to read down the provisions;
d. Writ Petition (C) No. 847 of 2023 challenging the constitutional
validity of clauses (c) and (d) of Section 17(5). There is a
prayer to read down the clauses (c) and (d) of Section 17(5)
and Section 16(4) of the CGST Act;
e. Writ Petition (C) No. 1036 of 2023 challenging the constitutional
validity of clauses (c) and (d) of Section 17(5). There is a
prayer to read down the clauses (c) and (d) of Section 17(5)
and Section 16(4) of the CGST Act; and
f. Writ Petition (C) No. 1030 of 2022 containing similar prayers
SUBMISSIONS ON BEHALF OF ASSESSEES
6. Very detailed submissions have been made by the parties to the civil
appeals, intervenors and parties to the writ petitions. We find that
the submissions made by the learned counsel for the assessees and
the intervenors are repetitive. There are a large number of decisions
relied upon, whether relevant or irrelevant. Brevity is the hallmark of
good advocacy. It would be ideal if parties on one side file joint written
submissions. The Judges and lawyers are humans. Sometimes, bulky
compilations and submissions can be counterproductive.
[2024] 10 S.C.R. 801

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

7. Assessees have submitted that clauses (c) and (d) and sub-section (5)
of Section 17 are violative of Articles 14, 19(1)(g) and 300A of the
Constitution of India. The submissions concerning the challenge to
constitutional validity can be summarised as follows:
a. Section 17(5)(d) is violative of Article 14 since it classifies
assessees engaged in the business of constructing immovable
properties and then renting/leasing/letting out etc. premises
within the said immovable properties on the same footing as
assessees engaged in the business of constructing immovable
properties and then selling the immovable properties or
premises within the said immovable properties, by denying
them ITC for their business expenditure, i.e., the expenditure
incurred in constructing the immovable properties. Therefore,
it is submitted that the provision treats unequals as equals and
contravenes the principle of GST Law, i.e., to allow ITC for
business expenditure. Therefore, the provisions are arbitrary,
irrational and unreasonable.
b. There is no intelligible differentia on the basis of which such
classification is done. Creation of an immovable property is not
a differentia. The contention is that works contracts, namely
the contracts for the construction of immovable property
wherein transfer of property is involved, are treated as a
supply of services. Therefore, de jure, they are treated as a
supply of services notwithstanding the immovable character of
the deliverable. It is submitted that there are cases where a
transaction may seemingly appear to involve a supply of goods,
but in essence, it is a transaction involving something else. An
illustration is given of a lawyer drafting a legal contract. In such
a case, the deliverable may be in the form of documents handed
over to the client and, therefore, apparently may appear to be a
supply of goods. However, it is a legal service rendered, which
is what the bargain was for. In short, the dominant intention
test, as laid down in the case of Bharat Sanchar Nigam
Limited & Anr. v. Union of India & Ors.,2 must be applied. It is
submitted that under the CGST Act, a works contract involving
the creation of immovable property is treated as a supply of

2 [2006] 2 SCR 823 : (2006) 3 SCC 1
802 [2024] 10 S.C.R.

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services. Thus, the nature of the deliverable, namely, building,
etc., has no relevance to the levy of GST. Under the CGST
Act, the immovable character of the deliverables, such as
buildings, etc., under a works contract is entirely disregarded.
Therefore, such immovable property cannot be said to exist
under the architecture of GST. In short, the submission is that
the differentia canvassed by the State, which is an immovable
characteristic of the deliverable under the works contract, is
artificial and non-existent in the eyes of the law. As intelligible
differentia does not exist, the first condition of the twin test can
be said to be satisfied;
c. Break in the credit chain is also not a differentia, since, in
the assessees’ case, unlike in the case of assessees selling
immovable properties, there is no break in the credit chain. The
break arises when the recipient uses the supplier’s output to
make non-taxable transactions for which GST is not payable
by the recipient. In such a case, credit cannot be utilised in
the subsequent leg of the transaction from where the break in
the chain took place. Several illustrations have been given in
support of this submission. It was submitted that there is no
break in the chain at any of the levels, starting from the sub-
contractor to the main contractor and the petitioner, since all
three entities are liable to output GST, and therefore, in such
a case, denial of credit cannot be justified;
d. It is submitted that even assuming that coming into existence
of an immovable property is an intelligible differentia, it has
no nexus with the objects of the CGST Act. The reason is
that denying credit in such cases essentially perpetuates and
continues the cascading effect of tax, contrary to the very object
of the CGST Act of eliminating the cascading effect of tax and
achieving tax neutrality. For example, if a manufacturer hires a
contractor to build a factory building through a works contract,
the manufacturer would have to pay GST for the services
rendered by the contractor. If the manufacturer is not permitted
to avail ITC for the GST so paid, the GST would be included
in the cost of the output product price, upon which further GST
would be levied, leading to tax on tax. If what is being supplied
by the seller is a service, it has to be necessarily received as
a service by the buyer;
[2024] 10 S.C.R. 803

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

e. Section 17(5)(c) and (d) remain vague due to the absence of
definitions of the expressions “on its own account” and “plant
or machinery”. The distinction between the expression “plant
and machinery” used in Section 17(5)(c) and the expression
“plant or machinery” used in Section 17(5)(d) has not been
clarified by the Government. Therefore, the provisions suffer
from vagueness. It is submitted that if a provision is very vague,
it can be struck down, as held in the case of Shreya Singhal
v. Union of India.3
f. It is submitted that ITC is the bedrock of the GST framework.
The right to avail of ITC is a statutory right in terms of Section 16
of the GST Act. The receipt of rental income and tax payable
are direct consequences of the construction undertaken. By
blocking the ITC on the rentals collected by the assessee who
has constructed the building, the State is unjustly enriching itself
and violating the right to avail ITC flowing from Section 300A of
the Constitution of India. Reliance is also placed on a decision
of this Court in the case of Union of India v. Bharti Airtel
Limited & Ors.;4 and
g. Reliance has been placed on numerous decisions concerning
the principles for examining the constitutional validity of taxation
statutes. It is submitted that though, in the matters of taxing
Statutes, the legislature enjoys a very wide latitude, and the
Courts are expected to show deference to legislative choices,
a decision of this Court in the case of Federation of Hotel &
Restaurant Association of India, etc. v. Union of India and
Ors.5 holds that wide latitude is also subject to exceptions, it
is argued that “wide latitude” does not mean “wild latitude”. On
the twin test of reasonable classification, reliance was placed
on various decisions, including those in the case of R.K Garg
v. Union of India and Ors.,6 Twyford Tea Co. Ltd. and Anr. v.
State of Kerala and Anr.,7 Union of India and Ors. v. Nitdip

3 [2015] 5 SCR 963 : (2015) 5 SCC 1
4 (2021) SCC OnLine SC 1006
5 [1989] 2 SCR 918 : (1989) 3 SCC 634
6 [1982] 1 SCR 947 : (1981) 4 SCC 675
7 [1970] 3 SCR 383 : (1970) 1 SCC 189
804 [2024] 10 S.C.R.

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Textile Processors Pvt. Ltd. and Anr..8 Varying standards of
review under the doctrine of classification are typically applied to
economic and non-economic legislation, with the rational basis
test being applied to economic legislation. Various decisions
were relied upon dealing with the wide latitude doctrine in
relation to economic legislations. Reliance was placed on
the Government of Andhra Pradesh and Ors. v. P. Laxmi
Devi,9 Assistant Commissioner of Urban Land Tax and
Ors. v. Buckingham and Carnatic Co. Ltd., Etc.,10 Jindal
Stainless Ltd. and Anr. v. State of Haryana and Ors.11 and
State of Tamil Nadu and Anr. v. National South Indian River
Interlinking Agriculturist Association.12 The true import of
the legislative provision is to be understood from the plain
reading of the provision and not on the basis of affidavits or
submissions of the State. A decision in the case of Sanjeev
Coke Manufacturing Company v. M/s Bharat Coking Coal
Ltd. & Anr.13 is relied upon.
8. Assessees have submitted that clauses (c) and (d) and sub-section (5)
of Section 17 must be read down to the extent that ITC is blocked
for suppliers who procure taxable works contract services, goods or
services on the input side and then provide taxable supplies on the
output side. The submissions about reading down clauses (c) and (d)
of Section 17(5) of the CGST Act can be summarised as follows:
a. The statement of objects and reasons of the Constitution (122nd
Amendment) Bill, 2014 shows that Articles 246A and 279A were
introduced to simplify the indirect tax regime to prevent the
cascading effect of multiplicity of taxes. The cascading effect of
taxes can be removed only by introducing a system for allowance
of ITC so that there would not be any missing link in the chain
or series of transactions culminating into deliverable goods and
services or both to the ultimate end-user, who is the customer.
Reliance has been placed on the observations made by this

8 [2011] 13 SCR 26 : (2012) 1 SCC 226
9 [2008] 3 SCR 330 : (2008) 4 SCC 720
10 [1970] 1 SCR 268 : (1969) 2 SCC 55
11 [2016] 10 SCR 1 : (2017) 12 SCC 1
12 [2021] 7 SCR 479 : (2021) 15 SCC 534
13 [1983] 1 SCR 1000 : (1983) 1 SCC 147
[2024] 10 S.C.R. 805

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

Court in the case of Union of India & Anr v. Mohit Minerals
Pvt. Ltd..14 The entire GST regime has been so designed that
the credit of tax paid at every stage of value addition from the
point of manufacture to the point of consumption could be availed
at the next stage. It provides for seamless transfer of ITC from
one stage to another. Moreover, GST is a destination-based
tax on consumption, and accordingly, the final burden of the
tax must be borne by the customers and not the businesses.
If the entire scheme of the CGST Act is perused, except for
clauses (c) and (d) of Section 17(5), the ITC is not denied when
the transaction is from business to business.
b. The assessees pay substantial amounts for the construction
of immovable properties and are levied CGST on the same.
However, since they are not permitted to avail of the CGST
paid as ITC, it gets added to the price of services they supply,
i.e., renting/leasing/letting out, etc. Further, CGST is leviable
on the supply of these services, resulting in tax on tax or the
cascading effect of tax. Moreover, due to the denial of ITC, the
assessees have to bear the tax burden. Thus, the interpretation
put by revenue to clauses (c) and (d) of Section 17(5), as per
which ITC is denied to assessees on construction expenditure,
results in the cascading effect of taxes and denial of credit for
business expenditure, which is in direct contradiction of the
objects of GST Law as elaborated previously. It is submitted
that ITC cannot be denied solely because immovable properties
are created in the assessee’s business. The primary condition
for availing of ITC is the nexus between the assessee’s input
and output business activities, which exists in the assessee’s
case. Direct corelation with input services or output services
is not necessary to avail of the benefit of ITC.
c. It is submitted that the phrase “on its own account” should
be read down and given a purposive construction instead of
a myopic one. The phrase should be deemed to mean when
construction is done for personal use and not for services, i.e.,
credit should be denied only when goods and services are
utilised for the construction of immovable property for his own

14 [2022] 9 SCR 300 : (2022) 10 SCC 700
806 [2024] 10 S.C.R.

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purposes, like an office building or factory building. In such a
case, no further GST on the sale of such a building occurs
and, therefore, a chain of taxability breaks. However, when
such immovable property is not being used by the assessee
itself but is used for other supplies, such as renting property
or supply of hotel accommodation services, etc., the same
should not be covered by the expression ‘on his own account’.
Therefore, when an immovable property itself is a means
by which business is being carried out, like letting out for
short-term purposes by a hotel, the embargo under
Section 17(5)(d) on ITC will not apply as it cannot be construed
on his own account. It is submitted that this manner of reading
down will ensure that in cases where there is no breakage in
the chain of taxable supply, ITC is available to a taxable person
who pays output tax. Moreover, this interpretation will avoid the
cascading effects of tax.
d. In the submissions made by assessees, principles of reading
down were sought to be invoked based on the decision of this
Court in the case of Indian Social Action Forum (INSAF) v.
Union of India.15 Reliance was also placed on a decision of
this Court in the case of Delhi Transport Corporation v. DTC
Mazdoor Congress & Ors.16
9. Assessees have submitted that Section 17(5)(d) of the CGST Act
can be interpreted in a manner that ITC is available to them for the
construction of immovable property used for the purpose of further
output supply. Shri Arvind P Datar, the learned senior counsel appearing
in Writ Petition (C) No. 804 of 2022 contended that the conclusion
rendered by the Orissa High Court in the impugned judgment could
have been reached without reading down Section 17(5)(d). The
contention is founded on a three-pronged argument:
a. Firstly, it is submitted that Clause (d) exempts “plant or
machinery” from blocked credit, which is distinct from the
expression “plant and machinery” used in Clause (c). Therefore,
the explanation to sub-section (6) of Section 17, which defines
“plant and machinery” is not applicable to the Clause (d).

15 [2020] 4 SCR 903 : (2021) 15 SCC 60
16 [1990] Supp. 1 SCR 142 : (1991) Supp (1) SCC 600
[2024] 10 S.C.R. 807

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

Revenue has opposed this contention by submitting that
‘or’ must be read as ‘and’ stating it to be the mistake of the
legislature and contending that assigning distinct meaning to
the two clauses would result in unequal treatment of works
contract services for the construction of immovable properties
under clause (c) and goods and services for the construction
of immovable properties under clause (d). The submissions in
relation to this can be summarised as follows:
y Section 17, being an exception to the general rule under
Section 16, must be construed strictly. The expression
“plant and machinery” has been used at least ten times in
Chapters V and VI of the CGST Act, and the expression
“plant or machinery” occurs only once in Section 17(5)(d).
Therefore, the intention of the legislature to treat the
expression “plant or machinery” differently from the
expression “plant and machinery” is apparent.
y In the model GST law, which the GST Council Secretariat
circulated in November 2016 for inviting suggestions
and comments, the expression “plant and machinery”
was used both in clauses (c) and (d) of Section 17(5).
However, while enacting the law, the legislature has
advisedly used the expression “plant and machinery”
in clause (c) and “plant or machinery” in clause (d) of
Section 17(5). Therefore, the intention of the legislature
cannot be brushed aside by contending that the use
of the word “or” in Section 17(5)(d) is a mistake of the
legislature.
y The expression “plant or machinery” has not been
defined under the CGST Act. The definition of “plant and
machinery” provided in the explanation to Section 17 will
not apply to the expression “plant or machinery”. Since the
legislature has intentionally used two different expressions
in clauses (c) and (d) of Section 17(5), different meanings
will have to be assigned to these expressions.
y Clauses (c) and (d) of Section 17(5) give unequal treatment
to unequals. Though they may appear to be similar, they
are quite different from each other. Besides using different
expressions, clauses (c) and (d) use a completely different
808 [2024] 10 S.C.R.

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language. Clause (c) applies to the works contract, which
will not per se apply to clause (d). The classes of cases
covered by clauses (c) and (d) of Section 17(5) are two
separate classes and the same cannot be treated equally.
b. Secondly, it is submitted that malls, hotels, warehouses, etc.,
are ‘plants’ and, therefore, are exempted from the provision. The
submissions in relation to this can be summarised as follows:
y The word “plant” is not defined under the CGST Act or the
General Clauses Act, 1897. It is also not defined in any
of the State GST enactments. Reliance was placed on a
decision of this Court in the case of Indcon Structurals
(P) Ltd. v. Commissioner of Central Excise, Chennai17 in
support of the proposition that the words and expressions
in taxing statute unless defined in the statute itself, have
to be understood in the sense that the person dealing with
them understands them as per the trade understanding,
commercial and technical practice and usage. Reliance
was also placed on a decision of this Court in the case of
CIT, Andhra Pradesh v. Taj Mahal Hotel, Secunderabad18
wherein this court held that the word “plant” means land,
building, machinery, apparatus and fixtures employed in
carrying on trade and other industrial business.
y Functionality or essentiality tests must be applied to decide
what a plant is. Ultimately, a plant is an apparatus used
by a businessman for carrying on his business. It does
not include his stock in trade, but it does include all goods
and property, whether movable or immovable. Apart from
holding that a generating station building, hospital, and
pond are plants, this Court has also held that even a
dry dock is a plant. A building or a warehouse must be
considered a ‘plant’ within the meaning of Section 17(5)(d)
if it serves as an essential tool of trade with which business
is carried on. However, if it merely serves as a setting in
which business is carried on, it will not qualify as a ‘plant’.

17 [2006] Supp. 1 SCR 11 : (2006) 4 SCC 786
18 [1972] 1 SCR 168 : (1971) 3 SCC 550
[2024] 10 S.C.R. 809

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

y Since buildings have been specifically excluded from
the definition of “plant and machinery” in the explanation
to sub-section (5) of Section 17, the word ‘plant’ in the
expression ‘plant or machinery’ must be taken in its natural
sense, which will include buildings.
y In support of the submission that a shopping mall could be
treated as a plant, which will fall in the exception carved
out to Section 17(5)(d), reliance was placed on the decision
of this Court in the case of CIT, Trivandrum v. Anand
Theatres19 wherein it was held that when a building is
specially designed and constructed with some special
features to attract the customers, the building could be
treated as a plant. In the case of Commissioner of Income
Tax, Karnataka v. Karnataka Power Corporation,20 this
Court held that an electricity power generating station
building would have to be treated as a plant as it would
satisfy the functional test or test of essentiality. This Court
further held that the judgment in the case of Anand
Theatres19 would be limited to buildings used for hotels
or cinemas/theatres. Reliance was also placed on the
decision in the case of Commissioner of Income Tax
v. Victory Aqua Farm Ltd.,21 which holds that ponds
specially designed for doing business of aquaculture of
prawns should be treated as plants for the purposes of
the Income Tax Act.
y Reliance has been placed on numerous decisions
concerning the principles for interpreting taxation statutes.
Usually, a taxation Statute calls for strict interpretation,
as held in the decision of this Court in the case of
Commissioner of Customs (Import), Mumbai v. Dileep
Kumar & Company & Ors.22 It is equally well settled
that when two interpretations of a provision in a taxing
Statute are possible, the Court would ordinarily interpret

19 [2000] Supp. 1 SCR 338 : (2000) 5 SCC 393
20 (2002) 9 SCC 571
21 (2016) 16 SCC 553
22 (2018) 9 SCC 1
810 [2024] 10 S.C.R.

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the provisions in favour of the assessee and against the
revenue. Reliance was placed on this behalf in the case
of Sneh Enterprises v. Commissioner of Customs,
New Delhi23 and Commissioner of Income Tax, West
Bengal 1, Calcutta v. M/s Vegetables Products Ltd.24
It is submitted that if one reads Section 17 objectively,
it would be noticed that the restrictions on availing ITC
are imposed on a reasonable basis. The benefit of ITC is
excluded when the services are used for personal purposes
or for providing exempted services, or if the supply is
outside the ambit of levying GST. However, where the
taxing chain continues, ITC is not restricted. It is submitted
that the Court shall not interpret a statutory provision in
such a manner that it would create an additional fiscal
burden on a person.
c. Thirdly, it is submitted that services of renting/leasing/letting out,
etc., in relation to immovable property constitute supply. Clause 2
of Schedule II provides that any lease or letting out of the
building, including a commercial, industrial or residential complex
for business or commerce, is a supply of service. Clause 5(a)
of Schedule II provides that renting an immovable property is
a supply of service. Clause 5(b) of Schedule II provides that
the construction of a complex, building, civil structure or a part
thereof intended for sale to a buyer, wholly or partly, is also a
supply of service, except where the entire consideration has
been received after issuance of the completion certificate or
after its first occupation, whichever is earlier. Therefore, ITC
accrued on construction of immovable property can be availed
against these services.
Miscellaneous Submissions
10. It is submitted that even though sub-Section (5) of Section 17 starts
with the non-obstante clause, it cannot be said that the legislature
intended to override Section 16(1) in its entirety. It is submitted
that the non-obstante clause in Section 17(5) cannot cut down the

23 [2006] Supp. 5 SCR 817 : (2006) 7 SCC 714
24 [1973] 3 SCR 448 : (1973) 1 SCC 442
[2024] 10 S.C.R. 811

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

construction or restrict the scope of operation of Section 16(1).
Reliance was placed on a decision of this Court in the case of R.S.
Raghunath v. State of Karnataka & Anr.;25
11. It is pointed out that Section 17(5)(c) carves out an exception only
for works contracts, assuming that this is the only category of service
where there is no breakage in the chain of taxable supplies. It is
submitted that while Section 17(5)(c) allows ITC on works contracts
for contractors, ITC has been blocked for other developers;
12. The classification sought to be invoked by the Revenue leads to
invidious discrimination within the provision in as much as credit has
been allowed for the construction of immovable plant and machinery
during the execution of a works contract and for the construction of
a building during the execution of work by the sub-contractor under
its work contract with the main contractor;
13. It is submitted that Section 16(1) of the CGST Act is not pari materia
with the provisions of the Tamil Nadu Value Added Tax Act, 2006.
Therefore, the decisions relied upon by learned ASG will have no
application. It is submitted that the decision of this Court in the case
of Union of India & Ors v. VKC Footsteps India Pvt. Ltd.26 is
not relevant as this Court did not have an occasion to consider the
implications of statutory entitlement to ITC.
SUBMISSIONS OF THE REVENUE
14. Shri N. Venkataraman, learned Additional Solicitor General, has
made detailed submissions. He brought our attention to provisions
regarding taxation on goods and services in the pre-GST and post-
GST eras. He submitted that in the GST regime, the taxable event
is one common event, namely, the supply of goods and services.
He invited the attention of the Court to the definition of goods and
services in Article 366 of the Constitution. He submits that the
distinction between goods and services has not been obliterated. He
also pointed out the historical evolution of ITC, starting from MODVAT
credit, which was made available to inputs and raw materials and
later extended to capital goods.

25 [1991] Suppl. 1 SCR 387 : (1992) 1 SCC 335
26 [2021] 15 SCR 169 : (2022) 2 SCC 603
812 [2024] 10 S.C.R.

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15. His submissions about the challenge to constitutional validity can
be summarised as follows:
a. Classification of the assessees on the same footing as assessees
engaged in the business of constructing immovable properties
and then selling the immovable properties is justified on the
ground that the classification has been done on the basis of
intelligible differentia which has rational nexus with the object
of GST. The transactions lead to the creation of immovable
property, which itself is the intelligible differentia based on which
classification has been done. Such classification has a rational
nexus since there is a break in the tax chain and therefore, the
ITC is being denied;
b. Denial of ITC was justified on the ground that it is not a
fundamental or constitutional right. He submitted that ITC is a
statutory right, and in the absence of the right under the statute,
the Court cannot issue a mandamus to grant ITC. Reliance
has been placed upon the decision of this Court in the case of
ALD Automotive Pvt. Ltd. v. Commercial Tax Officer, now
upgraded as Assistant Commissioner (CT) & Ors.27 and in
particular, what is held in paragraphs 34, 37, 38 and 40.
c. In response to the principles for examining the constitutional
validity of taxation statutes, he submitted that the test of vice of
discrimination in a taxing statute is less rigorous. He submitted
that the Parliament is entitled to make policy choices and
adopt appropriate classifications given the latitude that our
Constitutional jurisprudence allows in the matters involving
tax legislation. The principle of equality does not preclude
the classification of property, credit, profession and events
for taxation. He submitted that it is settled law, as held in the
case of Hari Krishna Bhargav v. Union of India & Anr28 that
a taxing statute is not open to challenge on the ground that
the tax is harsh or excessive. He refuted a submission that
clauses (c) and (d) of Section 17(5) are fraud on the Constitution
or that they are manifestly arbitrary. He invited our attention to a
decision of the Constitution Bench in the case of Joseph Shine

27 [2018] 13 SCR 217 : (2019) 13 SCC 225
28 [1966] 2 SCR 22 : (1966) 2 SCR 22
[2024] 10 S.C.R. 813

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

v. Union of India29 and, in particular, what is held in paragraphs
163 to 165. He submitted that considering the test laid down
in the said decision, even assuming that clauses (c) and (d)
are discriminatory, they are not manifestly discriminatory. He
submitted that English decisions will not apply, as in India, there
is a constitutional and statutory distinction between goods that
are movables and immovables. This distinction is not available
in England.
16. His submissions about the interpretation of Section 17(5)(d) can be
summarised as follows:
a. The expression “plant or machinery” must be read as “plant and
machinery”. It is not uncommon to read “and” as “or” or “or” as
“and”. He relied upon a decision of this Court in the case of
Indore Development Authority v. Manoharlal & Ors.30 and,
in particular, what is held in paragraph 105. He also relied upon
another decision of this Court in the case of State of Bombay
v. R.M.D. Chamarbaugwala & Anr..31 Further, he submitted that
if “or” is not read as “and”, it would be discriminatory since ITC
would be available on a mall or warehouse, but under clause (c),
it would not be available on works contracts relating to the
construction of a mall or warehouse. In this regard, he stated
that Clauses (c) and (d) of Section 17(5) deal with the same
subject matter, i.e., immovable property and therefore they
cannot be treated unequally. Furthermore, he submitted that
the explanation to Section 17(5) applies to Chapters V and VI
and thus has to apply to clause (d). However, he accepted
that the expression “plant and machinery” occurs ten times
in Chapter V and Chapter VI and the expression “plant or
machinery” occurs only once in Section 17(5)(d). He invited
our attention to Section 16(3) of the CGST Act, which bars the
claim of depreciation on ‘plant and machinery’ if the assessees
choose to avail of ITC. Thus, ITC is allowable only when
depreciation is not claimed. He submitted that if the argument
of the assessees is accepted, they would be entitled to take
benefit of both ITC and depreciation simultaneously. In a similar

29 [2018] 11 SCR 765 : (2019) 3 SCC 39
30 [2020] 3 SCR 1 : (2020) 8 SCC 129
31 [1957] 1 SCR 874 : (1957) SCC OnLine SC 12
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vein, he submitted that if the submission is accepted, even
Sections 18(6) and 29(5) will not apply to plant or machinery
falling under Section 17(5)(d).
b. For identifying what would constitute plant and machinery/plant
or machinery, it is not necessary to refer to decisions under the
Income Tax Act as the same have no relevance. There is no
concept of ITC in the Income Tax Act. The scheme of the Act is
completely different. He further submitted that if the assessee’s
submission that a shopping mall or warehouse is treated as
a plant is accepted, it would amount to hostile discrimination.
c. Tax on goods cannot be extended to immovable property.
However, taxation on services can be raised even on using
immovable properties for rendition of services. He submitted that
when it comes to sales tax or VAT on goods, a consistent view
taken by this Court is that the sale would include the sale of
goods and not the sale of immovables. He submitted that malls,
hotels, office buildings, etc., are immovable properties; therefore,
GST cannot be levied. He relied upon the earlier decisions of
this Court arising out of the Central Excise Act, 1944. According
to him, those plants and machinery which are deeply rooted in
the earth and cannot be relocated without sufficient damage
are immovable goods. However, he accepted that renting an
immovable property amounts to a supply of service, which is
taxable under the CGST Act.
d. While dealing with the case of a shopping mall, he submitted that
since a shopping mall is an immovable property, it is excluded
from the GST. Therefore, it does not fall in Clause (5)(b)
of Schedule II. He submitted that the entire purpose of ITC
is to extend the ITC paid at the anterior stage to remove the
cascading burden of taxation at a subsequent stage. As there
is no GST payable on shopping malls, there is no need to
grant ITC. He pointed out that if a shopping mall is sold as an
immovable property immediately after the completion certificate
is issued, no GST is payable at the time of sale of the immovable
property. Therefore, ITC credit cannot be used. If the mall is
used to render renting service for five years and then is sold
after five years, no GST will be payable on the sale. However,
if ITC is allowed as contended during these five years, ITC will
[2024] 10 S.C.R. 815

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

be exhausted against GST payable on rental income. Thereafter,
the mall would be sold without paying any tax, which would
cause a substantial monetary loss. Learned ASG relied upon
a decision of this Court in Union of India v. Shri Harbhajan
Singh Dhillon,32 and in particular, what is held in paragraphs
74 to 76 and 82. He also relied upon a decision in the case
of India Cement Ltd. & Ors. v. State of Tamil Nadu & Ors.33
and State of W.B. v. Kesoram Industries Ltd. & Ors..34 He
pointed out that the construction of a complex building intended
for sale to a buyer will be treated as a supply of service except
where the entire consideration has been received after the
issuance of the commencement certificate. He pointed out
that the supply of a constructed building complex or a civil
structure before the issuance of the completion certificate can
be construed as a supply of services and will be liable to GST.
The dividing line is the issuance of a completion certificate. A
supply prior to the issuance of the commencement certificate
is treated as a supply of service, whereas a sale made after
the issuance of the completion certificate is not treated as a
supply of service.
Miscellaneous Submissions
e. He submitted that tax on works contracts is also a tax on
movable goods, either as goods, or during the transfer of goods,
or before accretion takes place, leading to their becoming
immovable property.
f. The learned ASG also dealt with the services on tax and work
contracts in the pre-GST regime. Relying upon the definition
of “works contract” in Article 366 (29A)(b) of the Constitution,
he submitted that what is taxed cannot be a taxation on the
immovable property.
GIST OF REJOINDER
17. By way of rejoinder, the learned counsel representing assessees
submitted that the legislature intentionally used the expression “plant

32 [1972] 2 SCR 33 : (1971) 2 SCC 779
33 [1989] Supp. 1 SCR 692 : (1990) 1 SCC 12
34 (2004) 10 SCC 201
816 [2024] 10 S.C.R.

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or machinery” in only one place, and the legislative intention has to
be adhered to.
18. It was submitted that in certain cases, CENVAT credit was allowed
for the construction of buildings. That is the view taken by the
Tribunals/High Courts.
19. Concerning the apprehension of misusing GST expressed by the
learned ASG, it was submitted that even if the argument of the
assessees is accepted, the ITC on goods or services used to construct
a warehouse or mall is only to a limited extent of GST payable on
rental activity. It was, therefore, submitted that the definition of “plant
or machinery” will not apply to “plant and machinery”.
20. The learned counsel submitted that there is no conflict between
Section 17(5)(d) and Section 16(3). He submitted that Section 16(3)
applies to “plant and machinery” and not to “plant or machinery”. He
submitted that even assuming that Section 16(3) applies to plant or
machinery, the effect of the provision is that if the registered person
claims depreciation on the tax component of the cost of capital goods
and plant and machinery under the provisions of the Income Tax
Act, 1961, he cannot avail of the ITC on the said tax component.
He submitted that there is no conflict between the provisions of
Section 17(5)(d) and Section 29(5) of the CGST Act. Inviting our
attention to Section 18(6), he submitted that the provision can be
pressed into service only in case of supply of capital goods or plant
and machinery on which ITC has been taken. He submitted that in
the facts of the case, it is nobody’s case that the registered persons
are supplying capital goods, plant or machinery.
21. It was argued that the constitutional bar in Entry 49 of List II exists only
against the levy of GST on land and buildings and not against the grant
of ITC on movable goods and services used for the construction of
buildings. In its wisdom, the legislature has allowed ITC on immovable
property provided it meets the criteria of functionality or essentiality of
a plant. It is submitted that GST is leviable on the activity of renting
and the activity of selling buildings before the grant of completion
certificate. The disallowance of ITC on goods and services used in
the construction of buildings could be a logical corollary only if the
buildings were intended to be sold as stock by the developer instead
of being further used for providing taxable goods or services. There
[2024] 10 S.C.R. 817

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

is no contradiction in promoting ITC on goods and services used
for the construction of buildings when such buildings are deployed
to provide taxable supplies on which GST is being discharged. Not
permitting ITC in such a situation would lead to absurdness and
the unintended consequence of breaking the ITC chain, which will
amount to thwarting the seamless flow of tax credits.
22. There is a deliberate intention to permit ITC on plant or machinery
under Section 17(5)(d) even if the plant or machinery is immovable,
and Section 17(5)(d) cannot be detracted by Section 16(3). He
submitted that Sections 16(3) and 17(5) must be read harmoniously.
REPLY TO REJOINDER
23. We may note here that submissions in brief were made by learned
ASG dealing with the arguments of Shri Arvind Datar, Senior Advocate.
His submission is that the expression “capital goods” is intended to
include “plant and machinery”. He submitted that what emerges from
steel, cement, etc., are immovable goods, which would be excluded
from GST. Since no GST is payable on immovable property, ITC is
not available.
BROAD ISSUES FOR CONSIDERATION
24. Considering the submissions made by the parties, the following main
questions arise for consideration:
(i) Whether the definition of “plant and machinery” in the
explanation appended to Section 17 of the CGST Act applies
to the expression “plant or machinery” used in clause (d) of
sub-section (5) of Section 17?
(ii) If it is held that the explanation does not apply to “plant or
machinery”, what is the meaning of the word “plant”? and
(iii) Whether clauses (c) and (d) of Section 17(5) and Section 16(4)
of the CGST Act are unconstitutional?
RULES REGARDING THE INTERPRETATION OF TAXING
STATUTES
25. Regarding the interpretation of taxation statutes, the parties have
relied on several decisions. The law laid down on this aspect is
fairly well-settled. The principles governing the interpretation of the
taxation statutes can be summarised as follows:
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a. A taxing statute must be read as it is with no additions and
no subtractions on the grounds of legislative intendment or
otherwise;
b. If the language of a taxing provision is plain, the consequence
of giving effect to it may lead to some absurd result is not a
factor to be considered when interpreting the provisions. It is
for the legislature to step in and remove the absurdity;
c. While dealing with a taxing provision, the principle of strict
interpretation should be applied;
d. If two interpretations of a statutory provision are possible, the
Court ordinarily would interpret the provision in favour of a
taxpayer and against the revenue;
e. In interpreting a taxing statute, equitable considerations are
entirely out of place;
f. A taxing provision cannot be interpreted on any presumption
or assumption;
g. A taxing statute has to be interpreted in the light of what is
clearly expressed. The Court cannot imply anything which is
not expressed. Moreover, the Court cannot import provisions
in the statute to supply any deficiency;
h. There is nothing unjust in the taxpayer escaping if the letter of
the law fails to catch him on account of the legislature’s failure
to express itself clearly;
i. If literal interpretation is manifestly unjust, which produces a
result not intended by the legislature, only in such a case can
the Court modify the language;
j. Equity and taxation are strangers. But if construction results
in equity rather than injustice, such construction should be
preferred;
k. It is not a function of the Court in the fiscal arena to compel
the Parliament to go further and do more;
l. When a word used in a taxing statute is to be construed and
has not been specifically defined, it should not be interpreted
in accordance with its definition in another statute that does
[2024] 10 S.C.R. 819

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

not deal with a cognate subject. It should be understood in its
commercial sense. Unless defined in the statute itself, the words
and expressions in a taxing statute have to be construed in the
sense in which the persons dealing with them understand, that
is, as per the trade understanding, commercial and technical
practice and usage.
RELEVANT PROVISIONS OF THE CGST ACT AND INTERPRETATION
THEREOF
26. Firstly, we will deal with the issue of interpretation of the relevant
statutory provisions. To deal with the first question, we must analyse
the provisions of the CGST Act. The charging Section is Section 9,
which reads as follows:
“9. Levy and collection.— (1) Subject to the provisions
of sub-section (2), there shall be levied a tax called
the central goods and services tax on all intra-State
supplies of goods or services or both, except on the
supply of alcoholic liquor for human consumption, on
the value determined under section 15 and at such
rates, not exceeding twenty per cent., as may be
notified by the Government on the recommendations
of the Council and collected in such manner as may
be prescribed and shall be paid by the taxable person.
(2) The central tax on the supply of petroleum crude, high
speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel shall be levied with
effect from such date as may be notified by the Government
on the recommendations of the Council.
(3) The Government may, on the recommendations of the
Council, by notification, specify categories of supply of
goods or services or both, the tax on which shall be paid
on reverse charge basis by the recipient of such goods
or services or both and all the provisions of this Act shall
apply to such recipient as if he is the person liable for
paying the tax in relation to the supply of such goods or
services or both.
(4) The Government may, on the recommendations of
the Council, by notification, specify a class of registered
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persons who shall, in respect of supply of specified
categories of goods or services or both received from
an unregistered supplier, pay the tax on reverse charge
basis as the recipient of such supply of goods or services
or both, and all the provisions of this Act shall apply to
such recipient as if he is the person liable for paying
the tax in relation to such supply of goods or services
or both.
(5) The Government may, on the recommendations of
the Council, by notification, specify categories of services
the tax on intra-State supplies of which shall be paid by
the electronic commerce operator if such services are
supplied through it, and all the provisions of this Act shall
apply to such electronic commerce operator as if he is the
supplier liable for paying the tax in relation to the supply
of such services:
Provided that where an electronic commerce operator does
not have a physical presence in the taxable territory, any
person representing such electronic commerce operator
for any purpose in the taxable territory shall be liable to
pay tax:
Provided further that where an electronic commerce
operator does not have a physical presence in the taxable
territory and also he does not have a representative in
the said territory, such electronic commerce operator
shall appoint a person in the taxable territory for the
purpose of paying tax and such person shall be liable
to pay tax.”
(emphasis added)
Thus, the GST is to be levied on supplies of goods or services or
both, as provided in sub-section (1) of Section 9. Sub-sections (3)
and (4) provide for certain categories of cases where the tax on the
supply of goods or services or both shall be paid on a reverse charge
basis by the recipient of such goods or services. As per Section 2(98)
of the CGST Act, ‘reverse charge’ means the liability to pay tax by
the recipient of the supply of goods or services, or both, instead of
the supplier. Therefore, when sub-sections (3) or (4) of Section 9
[2024] 10 S.C.R. 821

Chief Commissioner of Central Goods and Service Tax & Ors. v.
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are applicable, the recipients of goods, services, or both are liable
to pay tax as if they were the suppliers.
27. Section 16 deals with ITC, which reads thus:
“16. Eligibility and conditions for taking input tax
credit—(1) Every registered person shall, subject to
such conditions and restrictions as may be prescribed
and in the manner specified in Section 49, be entitled
to take credit of input tax charged on any supply of
goods or services or both to him which are used or
intended to be used in the course or furtherance of
his business and the said amount shall be credited to
the electronic credit ledger of such person.
(2) Notwithstanding anything contained in this section,
no registered person shall be entitled to the credit of any
input tax in respect of any supply of goods or services or
both to him unless,—
(a) he is in possession of a tax invoice or debit note
issued by a supplier registered under this Act, or such
other tax paying documents as may be prescribed;
(aa) the details of the invoice or debit note
referred to in clause (a) has been furnished by
the supplier in the statement of outward supplies
and such details have been communicated to
the recipient of such invoice or debit note in the
manner specified under Section 37;
(b) he has received the goods or services or both;
Explanation.—For the purposes of this clause,
it shall be deemed that the registered person
has received the goods or, as the case may
be, services—
(i) where the goods are delivered by the supplier
to a recipient or any other person on the direction
of such registered person, whether acting as an
agent or otherwise, before or during movement
of goods, either by way of transfer of documents
of title to goods or otherwise;
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(ii) where the services are provided by the
supplier to any person on the direction of and
on account of such registered person.
(ba) the details of input tax credit in respect
of the said supply communicated to such
registered person under Section 38 has
not been restricted;
(c) subject to the provisions of Section 41 [* * *],
the tax charged in respect of such supply has
been actually paid to the Government, either
in cash or through utilisation of input tax credit
admissible in respect of the said supply; and
(d) he has furnished the return under Section 39:
Provided that where the goods against an invoice are
received in lots or instalments, the registered person shall be
entitled to take credit upon receipt of the last lot or instalment:
Provided further that where a recipient fails to pay to
the supplier of goods or services or both, other than the
supplies on which tax is payable on reverse charge basis,
the amount towards the value of supply along with tax
payable thereon within a period of one hundred and eighty
days from the date of issue of invoice by the supplier,
an amount equal to the input tax credit availed by the
recipient shall be paid by him along with interest payable
under Section 50, in such manner as may be prescribed:
Provided also that the recipient shall be entitled to avail
of the credit of input tax on payment made by him to the
supplier of the amount towards the value of supply of
goods or services or both along with tax payable thereon.
(3) Where the registered person has claimed depreciation
on the tax component of the cost of capital goods and
plant and machinery under the provisions of the Income-
tax Act, 1961 (43 of 1961), the input tax credit on the said
tax component shall not be allowed.
(4) A registered person shall not be entitled to take input
tax credit in respect of any invoice or debit note for
supply of goods or services or both after the thirtieth day
[2024] 10 S.C.R. 823

Chief Commissioner of Central Goods and Service Tax & Ors. v.
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of November following the end of financial year to which
such invoice or debit note pertains or furnishing of the
relevant annual return, whichever is earlier:
Provided that the registered person shall be entitled to
take input tax credit after the due date of furnishing of the
return under Section 39 for the month of September, 2018
till the due date of furnishing of the return under the said
section for the month of March, 2019 in respect of any
invoice or debit note for supply of goods or services or
both made during the financial year 2017-18, the details
of which have been uploaded by the supplier under sub-
section (1) of Section 37 till the due date for furnishing
the details under sub-section (1) of said section for the
month of March, 2019.
(5) Notwithstanding anything contained in sub-section
(4), in respect of an invoice or debit note for supply of
goods or services or both pertaining to the Financial Years
2017-18, 2018-19, 2019-20 and 2020-21, the registered
person shall be entitled to take input tax credit in any
return under section 39 which is filed up to the thirtieth
day of November, 2021.
(6) Where registration of a registered person is cancelled
under Section 29 and subsequently the cancellation of
registration is revoked by any order, either under Section 30
or pursuant to any order made by the Appellate Authority
or the Appellate Tribunal or court and where availment
of input tax credit in respect of an invoice or debit note
was not restricted under sub-section (4) on the date of
order of cancellation of registration, the said person shall
be entitled to take the input tax credit in respect of such
invoice or debit note for supply of goods or services or
both, in a return under Section 39,—
(i) filed up to thirtieth day of November following the
financial year to which such invoice or debit note
pertains or furnishing of the relevant annual return,
whichever is earlier; or
(ii) for the period from the date of cancellation of
registration or the effective date of cancellation of
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registration, as the case may be, till the date of order
of revocation of cancellation of registration, where
such return is filed within thirty days from the date
of order of revocation of cancellation of registration,
whichever is later.”
(emphasis added)
From sub-section (1) of Section 16, it is apparent that only a registered
person, as defined by Section 2(94) of the CGST Act, can avail of
ITC. A person who is registered under Section 25 of the CGST Act
becomes a registered person. The availability of ITC is subject to such
conditions and restrictions as may be prescribed. The word “prescribed”
is defined to mean prescribed by the rules made under the CGST
Act. Therefore, the entitlement to ITC is subject to conditions and
restrictions as may be provided in the Rules framed under the CGST
Act. ITC has to be availed in the manner laid down by Section 49.
Sub-section (2) of Section 49 and other sub-sections deal with how
ITC can be availed. Under sub-section (1) of Section 16, a registered
person is entitled to take credit of the input tax charged on any supply
of goods or services or both to him, which are used or intended to be
used in the course of or in furtherance of his business. Input tax is
defined by Section 2(62). In relation to a registered person, it means
Central, State, Integrated or Union Territory tax charged on the supply
of goods or services or both made to him. It includes the tax payable
by him on a reverse charge basis under sub-sections (3) and (4) of
Section 9. Further conditions for the use of ITC are prescribed by
sub-section (2) of Section 16.
28. Sub-section (3) of Section 16 is of some relevance as it provides
that if a registered person has claimed depreciation on the tax
component of the cost of capital goods and plant and machinery
under the provisions of the Income Tax Act, 1961, he is disentitled
to ITC on the said tax component. In short, a registered person will
not be entitled to ITC on the tax component of the cost of capital
goods and plant and machinery if he claims depreciation on the
said tax component under the Income Tax Act. The object is that
a registered person does not take advantage of both depreciation
and ITC.
29. Now we come to sub-Section (4) of Section 16. Before the amendment
made by the Finance Act, 2022, the sub-section read thus:
[2024] 10 S.C.R. 825

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

“16. .. .. .. .. .. .. .. .. ..
(4) A registered person shall not be entitled to take input
tax credit in respect of any invoice or debit note for supply
of goods or services or both after the due date of furnishing
of the return under section 39 for the month of September
following the end of financial year to which such invoice
or debit note pertains or furnishing of the relevant annual
return, whichever is earlier.
Provided that the registered person shall be entitled to
take input tax credit after the due date of furnishing of the
return under section 39 for the month of September, 2018
till the due date of furnishing of the return under the said
section for the month of March, 2019 in respect of any
invoice or invoice relating to such debit note for supply of
goods or services or both made during the financial year
2017-18, the details of which have been uploaded by the
supplier under sub-section (1) of section 37 till the due
date for furnishing the details under sub-section (1) of said
section for the month of March, 2019.”
The Finance Act, 2022, substituted the words “due date of furnishing
return under Section 39 for the month of September” with “thirtieth day
of November” with effect from 1st October 2022. Under Section 39(1),
every registered person other than an Input Service Distributor is
required to furnish for every calendar month or part thereof a return
of inward and outward supplies of goods or services or both, ITC
availed, tax payable, tax paid, etc. The meaning of sub-section (4)
of Section 16 as amended is that a registered person can avail of
ITC in respect of any invoice or debit note for the supply of goods or
services before 30th day of November following the end of the financial
year to which such invoice or debit note pertains, or furnishing of
annual return, whichever is earlier.
30. Section 17 deals with apportionment of credit and blocked credits.
The provision regarding blocked credits is in sub-section (5) of
Section 17. Sub-sections (5) and (6) of Section 17 read thus:
“17. .. .. .. .. .. .. .. .. ..
(5) Notwithstanding anything contained in sub-section
(1) of Section 16 and sub-section (1) of Section 18,
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input tax credit shall not be available in respect of the
following, namely :—
(a) motor vehicles for transportation of persons having
approved seating capacity of not more than thirteen
persons (including the driver), except when they are used
for making the following taxable supplies, namely:—
(A) further supply of such motor vehicles; or
(B) transportation of passengers; or
(C) imparting training on driving such motor vehicles;
(aa) vessels and aircraft except when they are used—
(i) for making the following taxable supplies, namely:—
(A) further supply of such vessels or aircraft; or
(B) transportation of passengers; or
(C) imparting training on navigating such
vessels; or
(D) imparting training on flying such aircraft;
(ii) for transportation of goods;
(ab) services of general insurance, servicing, repair and
maintenance in so far as they relate to motor vehicles,
vessels or aircraft referred to in clause (a) or clause (aa):
Provided that the input tax credit in respect of such services
shall be available—
(i) where the motor vehicles, vessels or aircraft
referred to in clause (a) or clause (aa) are used for
the purposes specified therein;
(ii) where received by a taxable person engaged—
(I) in the manufacture of such motor vehicles,
vessels or aircraft; or
(II) in the supply of general insurance services
in respect of such motor vehicles, vessels or
aircraft insured by him;
(b) the following supply of goods or services or both—
[2024] 10 S.C.R. 827

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

(i) food and beverages, outdoor catering,
beauty treatment, health services, cosmetic
and plastic surgery, leasing, renting or hiring of
motor vehicles, vessels or aircraft referred to in
clause (a) or clause (aa) except when used for
the purposes specified therein, life insurance
and health insurance:
Provided that the input tax credit in respect of
such goods or services or both shall be available
where an inward supply of such goods or services
or both is used by a registered person for making
an outward taxable supply of the same category
of goods or services or both or as an element of
a taxable composite or mixed supply;
(ii) membership of a club, health and fitness
centre; and
(iii) travel benefits extended to employees
on vacation such as leave or home travel
concession:
Provided that the input tax credit in respect of
such goods or services or both shall be available,
where it is obligatory for an employer to provide
the same to its employees under any law for
the time being in force.
(c) works contract services when supplied for
construction of an immovable property (other
than plant and machinery) except where it is an
input service for further supply of works contract
service;
(d) goods or services or both received by a taxable
person for construction of an immovable property
(other than plant or machinery) on his own
account including when such goods or services
or both are used in the course or furtherance of
business.
Explanation.—For the purposes of clauses (c)
and (d), the expression “construction” includes
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re-construction, renovation, additions or
alterations or repairs, to the extent of capitalisation,
to the said immovable property;
(e) goods or services or both on which tax has been
paid under Section 10;
(f) goods or services or both received by a non-
resident taxable person except on goods imported
by him;
(fa) goods or services or both received by a taxable
person, which are used or intended to be used for
activities relating to his obligations under corporate
social responsibility referred to in Section 135 of the
Companies Act, 2013 (18 of 2013);
(g) goods or services or both used for personal
consumption;
(h) goods lost, stolen, destroyed, written off or
disposed of by way of gift or free samples; and
(i) any tax paid in accordance with the provisions of
Section 74 in respect of any period up to Financial
Year 2023-24.
(6) The Government may prescribe the manner in
which the credit referred to in sub-sections (1) and
(2) may be attributed.
Explanation.—For the purposes of this Chapter and
Chapter VI, the expression “plant and machinery”
means apparatus, equipment, and machinery fixed
to earth by foundation or structural support that
are used for making outward supply of goods or
services or both and includes such foundation
and structural supports but excludes—
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory
premises.”
(emphasis added)
[2024] 10 S.C.R. 829

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

Section 17(5) begins with a non-obstante clause. A non-obstante
clause is a device used by the legislature that is usually employed
to give an overriding effect to certain provisions over some contrary
provisions that may be found in the same or some other enactments.
Such a clause is used to indicate that the said provision should prevail
despite anything to the contrary in the provisions mentioned in the
non-obstante clause. It is pertinent to note that in view of the non-
obstante clause used at the beginning of sub-section (5), it seeks
to override both sub-section (1) of Section 16 and sub-section (1)
of Section 18. As noted earlier, sub-section (1) of Section 16 lays
down the eligibility and conditions for taking ITC. Sub-section (1) of
Section 18 deals with the availability of ITC in special circumstances.
Therefore, in the cases covered by sub-section (5), ITC is not available.
In a sense, sub-section (5) of Section 17 carves out an exception to
the provisions of sub-section (1) of Sections 16 and 18, which confer
the benefit of ITC.
ANALYSIS OF CLAUSES (c) AND (d)
31. Now, we analyse clauses (c) and (d) of Section 17(5). Clause (c)
applies when works contract services are supplied for constructing
immovable property. The definition of “works contract” under
Section 2(119) is extensive. It reads thus:
“2.Definitions:-
.. .. .. .. .. .. .. .. .. ..
(119) “works contract” means a contract for building,
construction, fabrication, completion, erection, installation,
fitting out, improvement, modification, repair, maintenance,
renovation, alteration or commissioning of any immovable
property wherein transfer of property in goods (whether as
goods or in some other form) is involved in the execution
of such contract;”
Thus, in the case of works contract services supplied for the
construction of immovable property, the benefit of ITC is not available.
However, there are exceptions to clause (c). First is when goods or
services, or both, are received by a taxable person for the construction
of “plant and machinery”, as defined in the explanation to Section 17.
The second exception is where the works contract service supplied
for the construction of immovable property is an input service for
further supply of the works contract.
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32. Clause (d) of Section 17(5) is different from clause (c) in various
aspects. Clause (d) seeks to exclude from the purview of sub-
section (1) of Sections 16 and 18, goods or services or both
received by a taxable person to construct an immovable property
on his own account. There are two exceptions in clause (d) to the
exclusion from ITC provided in the first part of Clause (d). The
first exception is where goods or services or both are received by
a taxable person to construct an immovable property consisting
of a “plant or machinery”. The second exception is where goods
and services or both are received by a taxable person for the
construction of an immovable property made not on his own account.
Construction is said to be on a taxable person’s “own account”
when (i) it is made for his personal use and not for service or (ii)
it is to be used by the person constructing as a setting in which
business is carried out. However, construction cannot said to be
on a taxable person’s “own account” if it is intended to be sold or
given on lease or license.
33. Section 17(5) incorporates an explanation which provides that
the word “construction” used in clauses (c) and (d) includes
reconstruction, renovation, additions, alterations or repairs, to the
extent of capitalisation, to the immovable property. Thus, a very
wide meaning has been assigned to the expression “construction”
by the said explanation.
34. There is hardly a similarity between clauses (c) and (d) of Section 17(5)
except for the fact that both clauses apply as an exception to sub-
section (1) of Section 16. Perhaps the only other similarity is that
both apply to the construction of an immovable property. Clause (c)
uses the expression “plant and machinery”, which is specifically
defined in the explanation. Clause (d) uses an expression of “plant
or machinery”, which is not specifically defined.
35. Now, what is material is the explanation to Section 17, which reads
thus:
“Explanation.––For the purposes of this Chapter and
Chapter VI, the expression ―plant and machinery
means apparatus, equipment, and machinery fixed to
earth by foundation or structural support that are used
for making outward supply of goods or services or both
and includes such foundation and structural supports
but excludes—
[2024] 10 S.C.R. 831

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

(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.”
The explanation defines the meaning of the expression “plant and
machinery”. However, as stated earlier, the expression “plant or
machinery” has not been defined under the CGST Act. It is pertinent
to note that clauses (c) and (d) do not altogether exclude every
class of immovable property from the applicability of ITC. In the
case of clause (c), if the construction is of “plant and machinery” as
defined, the benefit of ITC will accrue. Similarly, under clause (d), if
the construction is of a “plant or machinery”, ITC will be available.
36. The Union legislature cannot levy taxes on lands and buildings as it
is exclusively a State subject at item no.49 in List II of Schedule VII
of the Constitution of India. It is, therefore, necessary to consider
the categories of services concerning land and buildings, which are
within the purview of the CGST Act. Section 2(102) defines service
as meaning anything other than goods, money and securities but
includes activities relating to the use of money or its conversion by
cash or by any other mode, from one form, currency or denomination,
to another form, currency or denomination for which a separate
consideration is charged. Under the CGST Act, the supply of service
is taxable. The scope of supply of services or goods is laid down in
Section 7 of the CGST Act, which reads thus:
“7. Scope of supply.—(1) For the purposes of this Act,
the expression “supply” includes—
(a) all forms of supply of goods or services or
both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal made or agreed
to be made for a consideration by a person in the
course or furtherance of business;
(aa) the activities or transactions, by a person, other
than an individual, to its members or constituents
or vice-versa, for cash, deferred payment or other
valuable consideration.
Explanation.—For the purposes of this clause, it
is hereby clarified that, notwithstanding anything
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contained in any other law for the time being in
force or any judgment, decree or order of any Court,
tribunal or authority, the person and its members or
constituents shall be deemed to be two separate
persons and the supply of activities or transactions
inter se shall be deemed to take place from one such
person to another;
(b) import of services for a consideration whether
or not in the course or furtherance of business; and
(c) the activities specified in Schedule I, made
or agreed to be made without a consideration;
(1-A) where certain activities or transactions
constitute a supply in accordance with the
provisions of sub-section (1), they shall be treated
either as supply of goods or supply of services
as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1),—
(a) activities or transactions specified in Schedule
III; or
(b) such activities or transactions undertaken by the
Central Government, a State Government or any
local authority in which they are engaged as public
authorities, as may be notified by the Government
on the recommendations of the Council,
shall be treated neither as a supply of goods nor a
supply of services.
(3) Subject to the provisions of sub-sections (1), (1-A) and
(2), the Government may, on the recommendations of the
Council, specify, by notification, the transactions that are
to be treated as—
(a) a supply of goods and not as a supply of services;
or
(b) a supply of services and not as a supply of goods.”
(emphasis added)
[2024] 10 S.C.R. 833

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

37. In view of clause (a) of sub-section (1) of Section 7, a supply of
services such as sale, transfer, licence, rental or lease made for
consideration is a supply. Whether the activities or transactions
covered by sub-section (1) of Section 7 constitute a supply has to be
considered in light of Schedule II. Schedule II has a title: “Activities or
transactions to be treated as supply of goods or supply of services”.
The activities/transactions incorporated in Schedule II are treated as
a supply of service. As far as lands and buildings are concerned,
clauses (2) and (5) of Schedule II are relevant, which read thus:
“2. Land and Building
(a) any lease, tenancy, easement, licence to occupy land
is a supply of services;
(b) any lease or letting out of the building including a
commercial, industrial or residential complex for business or
commerce, either wholly or partly, is a supply of services.
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
5. Supply of services
The following shall be treated as supply of services,
namely:—
(a) renting of immovable property;
(b) construction of a complex, building, civil structure or
a part thereof, including a complex or building intended
for sale to a buyer, wholly or partly, except where the
entire consideration has been received after issuance of
completion certificate, where required, by the competent
authority or after its first occupation, whichever is earlier.
Explanation.—For the purposes of this clause—
(1) the expression “competent authority” means the
Government or any authority authorised to issue completion
certificate under any law for the time being in force and
in case of non-requirement of such certificate from such
authority, from any of the following, namely:—
(i) an architect registered with the Council of Architecture
constituted under the Architects Act, 1972; or
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(ii) a chartered engineer registered with the Institution of
Engineers (India); or
(iii) a licensed surveyor of the respective local body of the
city or town or village or development or planning authority;
(2) the expression “construction” includes additions,
alterations, replacements or remodelling of any existing
civil structure;
(c) temporary transfer or permitting the use or enjoyment
of any intellectual property right;
(d) development, design, programming, customisation,
adaptation, upgradation, enhancement, implementation
of information technology software;
(e) agreeing to the obligation to refrain from an act, or to
tolerate an act or a situation, or to do an act; and
(f) transfer of the right to use any goods for any purpose
(whether or not for a specified period) for cash, deferred
payment or other valuable consideration.”
38. Clause 5(b) of Schedule II has to be read with the provisions of
Schedule III, which has a title: “Activities or transactions which shall
be treated neither as a supply of goods nor a supply of services”.
Clause (5) of Schedule III reads thus:
“5. Sale of land and, subject to clause (b) of paragraph 5
of Schedule II, sale of building.”
39. Analysis of the provisions of Section 7 read with Schedule II and III
shows that:
a. Any lease, tenancy, easement or licence to occupy land is a
supply of services. Clause 2(a) is not qualified by the purpose
of the use. But the sale of a land is not a supply of service;
b. Any lease or letting out of buildings for business or commerce,
wholly or partly, is a supply of services. Clause 2(b) will not
apply if the lease or letting out of a building is for a residential
purpose;
c. Renting of an immovable property is a supply of service;
[2024] 10 S.C.R. 835

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

d. Construction of a complex, building, civil structure or a part
thereof, including a complex, building or civil structure intended
for sale to a buyer, wholly or partly, is a supply of service.
However, the construction of a complex, building or civil
structure, referred to above, is excluded from the category of
supply of service if the entire consideration for sale is received
after issuance of the completion certificate, wherever required
or its first occupation, whichever is earlier. Broadly speaking, if
a building or a part thereof to which clause 5(b) is applicable is
sold before it is ready for occupation, the construction thereof
becomes a supply of service. Therefore, if a building is sold
by accepting consideration before issuance of a completion
certificate or before its first occupation, whichever is earlier, the
construction thereof becomes a supply of service;
40. If there is a complex, building or civil structure constructed which is
intended for sale to a buyer, wholly or partly, construction becomes
a supply of service only if consideration for sale is received before
the issuance of a completion certificate or after its first occupation,
whichever is earlier. Thus, if the consideration for sale is paid after
the competition certificate is issued or its first occupation, whichever
is earlier, the sale transaction will not amount to the supply of service.
However, no such distinction has been made in the case of lease,
tenancy, or licence concerning land or letting of buildings. Even if the
entire consideration for lease, tenancy or a licence to occupy land
or a lease of a building is paid after the issuance of the completion
certificate or its first occupation, whichever is earlier, it continues to
be a supply of service.
41. It is also necessary to bear in mind the philosophy of the GST regime,
which is discussed in the case of Mohit Minerals.14 This Court held
that the philosophy of the GST is to incorporate a consumption
and destination-based test. The emphasis is on taxing supplies of
goods and services. If we apply the well-settled principles on the
interpretation of taxing statutes, as discussed in the earlier part of
this judgment, there is no scope to give any meaning to clause (c)
of Section 17(5) other than its plain and natural meaning. The
expression “plant and machinery” has been specifically defined in
the explanation of Section 17. Works contract service has been
defined under the CGST Act. We cannot add anything to clause (c)
or subtract anything from clause (c). ITC is a creation of legislature.
836 [2024] 10 S.C.R.

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Therefore, it can exclude specific categories of goods or services
from ITC. Exclusion of the category of works contracts by clause (c)
will not, per se, defeat the object of the CGST Act.
MEANING OF THE EXPRESSION “PLANT OR MACHINERY” IN
CLAUSE (d) OF SECTION 17(5)
42. The question is whether the explanation that lays down the meaning
of the expression “plant and machinery” in Section 17 will apply to
the expression “plant or machinery” used in Section 17 (5)(d).
43. Learned ASG himself accepted that the expression “plant and
machinery” appears at ten different places in Chapters V (Input Tax
Credit) and VI (Tax Invoice, Credit and Debit Notes) of the CGST Act.
According to him, the expression “plant or machinery” appears only
in clause (d) of Section 17(5). His submission is that the use of the
word “or” in clause (d) is a mistake of the legislature. To counter this,
it was submitted that in the Model GST Law, which the GST Council
Secretariat circulated in November 2016 to invite suggestions and
comments from the public, the expression ‘plant and machinery’ was
used in clauses (c) and (d). However, while enacting the CGST Act,
the legislature has consciously chosen to use the expression “plant
or machinery” only in clause (d). The impugned judgment in the main
Civil Appeal is more than five years old. The writ petition in which the
impugned decision was rendered is a six-year-old writ petition. If it
was a drafting mistake, as suggested by learned ASG, the legislature
could have stepped in to correct it. However, that was not done.
In such circumstances, it must be inferred that the legislature has
intentionally used the expression “plant or machinery” in clause (d) as
distinguished from the expression “plant and machinery”, which has
been used in several places. As the expression “plant or machinery”
appears to be intentionally incorporated, it is not possible to accept
the contention of the learned ASG that the word “or” in clause (d)
should be read as “and”. If the said contention is accepted, there will
not be any difference between the expressions “plant and machinery”
and “plant or machinery”. This will defeat the legislative intent.
44. The explanation to Section 17 defines “plant and machinery”. The
explanation seeks to define the expression “plant and machinery” used
in Chapter V and Chapter VI. In Chapter VI, the expression “plant and
machinery” appears in several places, but the expression “plant or
machinery” is found only in Section 17(5)(d). If the legislature intended
[2024] 10 S.C.R. 837

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

to give the expression “plant or machinery” the same meaning as
“plant and machinery” as defined in the explanation, the legislature
would not have specifically used the expression “plant or machinery”
in Section 17(5)(d). The legislature has made this distinction
consciously. Therefore, the expression “plant and machinery” and
“plant or machinery” cannot be given the same meaning. It may
also be noted here that the expression ‘plant or machinery’ is used
in dealing with a peculiar case of goods or services being received
by a taxable person for the construction of an immovable property
on his own account, even when such goods or services or both
are used in the course of furtherance of business. 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, we 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.
45. Now, the question which arises is what meaning should be given to
the expression “plant or machinery”. When the legislature uses the
expression “plant and machinery,” only a plant will not be covered
by the definition unless there is an element of machinery or vice
versa. This expression cannot be read as “plant or machinery”.
That is so 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.
46. The expression “plant or machinery” has a different connotation.
It can be either a plant or machinery. Section 17(5)(d) deals with
the construction of an immovable property. The very fact that the
expression “immovable property other than “plants or machinery” is
used shows that there could be a plant that is an immovable property.
As the word ‘plant’ has not been defined under the CGST Act or the
rules framed thereunder, its ordinary meaning in commercial terms
will have to be attached to it.
47. There are few decisions relied upon on this aspect. The first is
Commissioner of Central Excise, Ahmedabad v. Solid and Correct
838 [2024] 10 S.C.R.

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Engineering Works & Ors..35 The case arose from the demand for
duty and penalty under the Central Excise Act, 1944 (Excise Act).
The assessee was manufacturing parts and components for road
and civil construction machinery and equipment like Asphalt Drum/
Hot Mix Plants, etc. One of the questions examined by the Tribunal
was whether the plants so manufactured could be termed as goods.
The issue before this Court was whether setting up an Asphalt
Drum/Hot Mix Plant by using duty-paid components amounts to the
manufacture of excisable goods within the meaning of the Excise
Act. It was argued before this Court that the plants in question did
not satisfy the test of marketability and movability. This Court referred
to the definition of movable property in Section 3(36) of the General
Clauses Act, 1897, which defines movable property as property of
every description except immovable property. The same enactment
defines immovable property in Section 3(26), which is an inclusive
definition which includes land, benefits to arise out of land, and things
attached to the earth or permanently fastened to anything attached
to the earth. This Court considered the definition of the expression
“attached to the earth” in Section 3 of the Transfer of Property Act,
1882. In the facts of the case, it was held that the plants subject
matter of the case, were not per se immovable property as the same
cannot be said to get attached to the earth. This Court applied the
movability test by holding that the setting up of the plant itself is
not intended to be permanent at a given place. The plant can be
removed or is indeed removed after the road construction or repair
project is completed. The issue that we were called upon to decide
about the meaning of the plant did not arise in this case.
48. Another decision of this Court in the case of Taj Mahal Hotel18 was
pressed into service. The assessee was running a hotel. The issue
arose in a cognate enactment in the sense in the enactment providing
for levy of income-tax. The issue referred to the opinion of the High
Court was whether sanitary fittings and pipelines installed in the
hotel constituted a ‘plant’ within the meaning of Section 10(5) of the
Income Tax Act, 1922. The definition of plant in Section 10(5) of the
Income Tax Act, 1922 provided that ‘plant’ includes vehicles, scientific
apparatus, surgical equipment, and books purchased for the purposes

35 [2010] 4 SCR 476 : (2010) 5 SCC 122
[2024] 10 S.C.R. 839

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

of business, profession or vocation. The Court considered whether
the word plant should be given a broader meaning. In paragraph 6
of the said decision, this Court held thus:
“6. Now it is well settled that where the definition of a
word has not been given, it must be construed in its
popular sense if it is a word of everyday use. Popular
sense means “that sense which people conversant with
the subject-matter with which the statute is dealing,
would attribute to it”. In the present case, Section 10(5)
enlarges the definition of the word “plant” by including in
it the words which have already been mentioned before.
The very fact that even books have been included
shows that the meaning intended to be given to “plant” is
wide. The word “includes” is often used in interpretation
clauses in order to enlarge the meaning of the words or
phrases occurring in the body of the statute. When it is
so used, those words and phrases must be construed
as comprehending not only such things as they signify
according to their nature and import but also those things
which the interpretation clause declares that they shall
include. The word “include” is also susceptible of other
constructions which it is unnecessary to go into.”
(emphasis added)
Thereafter, in paragraphs 8 and 9, this Court held thus:
“8. It cannot be denied that the business of a hotelier
is carried on by adapting a building or premises in a
suitable way to be used as a residential hotel where
visitors come and stay and where there is arrangement
for meals and other amenities are provided for their
comfort and convenience. To have sanitary fittings
etc. in a bathroom is one of the essential amenities or
conveniences which are normally provided in any good
hotel, in the present times. If the partitions in Jarrold case
[(1887) 19 QB 647] could be treated as having been
used for the purpose of the business of the trader, it is
incomprehensible how sanitary fittings can be said to have
no connection with the business of the hotelier. He can
reasonably expect to get more custom and earn larger
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profit by charging higher rates for the use of rooms if the
bathrooms have sanitary fittings and similar amenities. We
are unable to see how the sanitary fittings in the bathrooms
in a hotel will not be “plant” within Section 10(vi)(b) read
with Section 10(5) when it is quite clear that the intention
of the legislature was to give it a wide meaning and that
is why, articles like books and surgical instruments were
expressly included in the definition of “plant”. In decided
cases, the High Courts have rightly understood the meaning
of the term “plant” in a wide sense. (See CIT v. Indian
Turpentine and Rosin Co. Ltd. [(1970) 75 ITR 533].
9. If the dictionary meaning of the word plant were to be
taken into consideration on the principle that the literal
construction of a statute must be adhered to unless the
context renders it plain that such a construction cannot
be put on the words in question — this is what is stated
in Webster’s Third New International Dictionary:
“Land, buildings, machinery, apparatus and fixtures
employed in carrying on trade or other industrial business....”
(emphasis added)
49. The next decision in the line is in the case of Anand Theatres.19
This was a case where the issue was whether a building which is
used as a hotel or a cinema theatre can be considered as apparatus
or a tool for running a business so that it can be termed as a plant
and depreciation can be allowed on the same under the Income
Tax Act, 1961. This Court dealt with Section 32, which provided for
granting depreciation to buildings, machinery, and plants. This Court
extensively referred to its earlier decision in the case of Taj Mahal
Hotel18 and other decisions of this Court and High Courts. This
Court decided the question of whether a building used for running
a hotel or cinema business could be held to be a plant. This Court
considered British decisions on the point. Paragraphs 61 to 63 of
the decision are material, which read thus:
“61. Further, there are hotels of all kinds and hotel business
can be carried on in all kinds of buildings, may be pucca
or kuccha constructions. A building intended to be used or
in fact used earlier either as a residential accommodation
[2024] 10 S.C.R. 841

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

or business purpose can be converted for running hotel
business. Section 32 itself contemplates a hotel business
being carried on in a residential accommodation including an
accommodation which is in the nature of guest house. On
occasions hotel buildings may be constructed with a special
design and features so as to attract and accommodate
a certain class of tourist. Similarly with regard to cinema
business, it can be carried on in a specially-designed
and constructed building and also in other buildings. Still,
however, it would be difficult to draw a distinction and
differentiate by holding that a building which is specially
designed and constructed for running a hotel or cinema
would be covered by a “plant” and other buildings used for
the same purpose would not get depreciation as “plant”,
even though such business is carried on in such premises.
In our view, the Delhi High Court has in the case of R.C.
Chemical Industry [(1982) 134 ITR 330 (Del)] rightly
observed that mere fact that manufacture of saccharine
would be better carried on in a building having atmospheric
controls would not convert the building from “the setting”
to “the means” for carrying the business. Similarly, the
Rajasthan High Court also in Lake Palace Hotels and Motels
[(1997) 226 ITR 561 (Raj)] rightly observed that simply
because some special fittings or controlling equipments are
attached for the purpose of carrying on hotel business, it
will not take it out of the category of building and make it a
plant. In our view special fittings or equipments to control
atmospheric effects would be plant, but not the building
which houses such equipments.
62. Further for running almost all industries or for carrying
on any trade or business building is required. On occasions
building may be designed and constructed to suit the
requirement of a particular industry, trade or business. But
that would not make such building a plant. It only shelters
running of such business. For each and every business,
trade or industry, building is required to carry on such
activity. That means building plays some role and in other
words, its function is to shelter the business, but it has no
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other function except in some rare cases such as dry dock
where it plays an essential part in the operations which take
place in getting a ship into the dock, holding it squarely
and then returning it to the river. Building is more durable.
If the contention of the assessee is accepted, virtually
all such buildings would be considered to be a plant and
the distinction which the legislature has made between
“building” and “machinery” or “plant” would be obliterated.
63. Learned counsel for the assessee submitted that the
words “plant” and “building” are not mutually exclusive.
“Plant” may include building in a certain set of circumstances
and, therefore, applying the functional tests the assessee
would be entitled to depreciation under the head “it is
more beneficial to it”. He submitted that in the modern
era, theatre building and hotel building are integral part of
operation for carrying out such business and, therefore,
such building should be considered as a “plant”.
Ultimately, in paragraph 67, this Court held thus:
“67. In the result, it is held that the building used for
running of a hotel or carrying on cinema business
cannot be held to be a plant because:
(1) The scheme of Section 32, as discussed above,
clearly envisages separate depreciation for a building,
machinery and plant, furniture and fittings etc. The
word “plant” is given inclusive meaning under
Section 43(3) which nowhere includes buildings.
The Rules prescribing the rates of depreciation
specifically provide grant of depreciation on buildings,
furniture and fittings, machinery and plant and ships.
Machinery and plant include cinematograph films and
other items and the building is further given meaning
to include roads, bridges, culverts, wells and tubewells.
(2) In the case of Taj Mahal Hotel [(1971) 3 SCC
550 : (1971) 82 ITR 44] this Court has observed
that business of a hotelier is carried on by adopting
building or premises in suitable way. Meaning thereby
building for a hotel is not an apparatus or adjunct for
[2024] 10 S.C.R. 843

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

running of a hotel. The Court did not proceed to hold
that a building in which the hotel was run was itself
a plant, otherwise the Court would not have gone
into the question whether the sanitary fittings used
in bathroom was plant.
(3) For a building used for a hotel, specific provision is
made granting additional depreciation under Section
32(1)(v) of the Act.
(4) Barclay, Curle & Co. case [(1969) 1 WLR 675 :
(1969) 1 All ER 732 : (1970) 76 ITR 62 : 1969 SC
30 : 45 TC 221 (HL)] decided by the House of Lords
pertains to a dry dockyard which itself was functioning
as a plant, that is to say, structure for the plant was
constructed so that dry dock can operate. It operated
as an essential part in the operations which took place
in getting a ship into the dock, holding it securely and
then returning it to the river. The dock as a complete
unit contained a large amount of equipment without
which the dry dock could not perform its function.
(5) Even in England, courts have repeatedly held
that the meaning to the word “plant” given in various
decisions is artificial and imprecise in application,
that is to use the words of Lord Buckley, “it is now
beyond doubt that the word ‘plant’ is used in the
relevant section in an artificial and largely judge-made
sense”. Lord Wilberforce commented by stating that
“no ordinary man, literate or semi-literate, would think
that a horse, a swimming pool, moveable partitions,
or even a dry dock was plant”.
(6) For the hotel building and hospital in the case
of Carr v. Sayer [65 TC 15 : 1992 CLY 2470 : 1992
STC 396 (Ch D)] it has been observed that a hotel
building remains a building even when constructed to
a luxury specification and similarly a hospital building
for infectious diseases which might require a special
layout and other features also remains a premises
and is not a plant.
It is to be added that all these decisions are based
upon the interpretation of the phrase “machinery or
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plant” under Section 41 of the Finance Act, 1971
which was applicable and there appears no such
distinction for grant of allowance on different heads
as provided under Section 32 of the Income Tax Act.
(7) To differentiate a building for grant of additional
depreciation by holding it to be a “plant” in one
case where the building is specially designed and
constructed with some special features to attract the
customers and a building not so constructed but used
for the same purpose, namely, as a hotel or theatre
would be unreasonable.”
50. Another decision on the point is in the case of Victory Aqua Farm
Ltd.,21 wherein the issue before this Court was whether a natural
pond used by the assessee, which was specially designed for rearing
prawns, could be a plant within the meaning of Section 32 of the
Income Tax Act, 1961. This Court heavily relied upon the decision of
a three-judge Bench of this Court in the case of Karnataka Power
Corporation.20 In this case, the question was whether a power-
generating station building is a plant. In the decision rendered by a
Bench of three Hon’ble Judges, it was held that the decision in the
case of Anand Theatres19 cannot be read broadly. In paragraphs
5 to 8 of the decision, it was held thus:
“5. It was the case of the assessee that it was entitled
to investment allowance as applicable to a plant in
respect of its power-generating station building. In a note
filed before the Commissioner (Appeals) it stated that it
had included for the purpose the value of its potential
transformer foundation, cable duct system, outdoor yard
structures and tail race channel. It explained that the
process of generation started from letting in water from
the reservoir into the penstocks and ducts which were the
water conductor system into the turbines. Once electricity
had been produced by generation, it had to be conducted,
as it was not possible to store the same, and the process
of generation continued until the electricity was led to
the transmission towers. The water that was used for
rotation of the turbines had to be removed and this was
done through the tail race channel. For stepping up the
electricity, transformers were used in the outdoor yard.
[2024] 10 S.C.R. 845

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

The conduction of the electricity was through conductors
held in ducts, called the cable duct system, which were
specifically designed for the purpose. The case of the
assessee, therefore, was that all these were part of the
special engineering works that were an essential part of
a generating plant and, therefore, it was entitled to have
the same treated as a plant for the purposes of investment
allowance. The Commissioner accepted the correctness
of the assessee's case. He held that it was clear that
the generating station buildings had to be treated as a
plant for the purposes of investment allowance. These
buildings could not be separated from the machinery and
the machinery could not be worked without such special
construction. He, therefore, allowed investment allowance
on the generating station building, as claimed. The Tribunal
affirmed this finding, as, indeed, did the High Court.
6. We, therefore, have before us a finding of fact recorded
by the fact-finding authority that the generating station
building is an integral part of the assessee's generating
system.
7. Our attention has been drawn by learned counsel for
the Revenue to the judgment of this Court in CIT v. Anand
Theatres [(2000) 5 SCC 393 : (2000) 244 ITR 192] . He
submits that, in that judgment, this Court has held that,
except in exceptional cases, the building in which the plant
is situated must be distinguished from the plant and that,
therefore, the assessee's generating station building was
not to be treated as a plant for the purposes of investment
allowance.
8. It is difficult to read the judgment in the case of
Anand Theatres [(2000) 5 SCC 393 : (2000) 244 ITR
192] so broadly. The question before the Court was
whether a building that was used as a hotel or a cinema
theatre could be given depreciation on the basis that
it was a “plant” and it was in relation to that question
that the Court considered a host of authorities of this
country and England and came to the conclusion that
a building which was used as a hotel or a cinema
theatre could not be given depreciation on the basis
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that it was a plant. We must add that the Court said:
(SCC p. 430, para 67)
“67. (7) To differentiate a building for grant of
additional depreciation by holding it to be a
‘plant’ in one case where the building is specially
designed and constructed with some special
features to attract the customers and a building
not so constructed but used for the same
purpose, namely, as a hotel or theatre would be
unreasonable.”
This observation is, in our view, limited to buildings
that are used for the purposes of hotels or cinema
theatres and will not always apply otherwise. The
question, basically, is a question of fact, and where it
is found as a fact that a building has been so planned
and constructed as to serve an assessee’s special
technical requirements, it will qualify to be treated
as a plant for the purposes of investment allowance.”
(emphasis added)
51. We may note here that the decision in the case of Anand Theatres19
is by a Bench of two Hon’ble Judges. Thus, the decision of a larger
Bench in the case of Karnataka Power Corporation20 limits the
applicability of the decision in the case of Anand Theatres19 to
hotels or cinema theatres. Therefore, the decision in the case of
Anand Theatres19 cannot be applied while considering the question
of whether a mall or warehouse or a building other than a hotel or
a cinema theatre can be said to be a “plant”.
52. This Court has laid down the functionality test. This Court held
that whether a building is a plant is a question of fact. This Court
held that if it is found on facts that a building has been so planned
and constructed as to serve an assessee’s special technical
requirements, it will qualify to be treated as a plant for the purposes
of investment allowance. The word ‘plant’ used in a bracketed
portion of Section 17(5)(d) cannot be given the restricted meaning
provided in the definition of “plant and machinery”, which excludes
land, buildings or any other civil structures. Therefore, in a given
case, a building can also be treated as a plant, which is excluded
from the purview of the exception carved out by Section 17(5)(d) as
[2024] 10 S.C.R. 847

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

it will be covered by the expression “plant or machinery”. We have
discussed the provisions of the CGST Act earlier. To give a plain
interpretation to clause (d) of Section 17(5), the word “plant” will
have to be interpreted by taking recourse to the functionality test.
53. One of the submissions of the learned ASG is that as the Union
legislature cannot levy tax on land and buildings, the chain is broken
once a building comes into existence by using goods and services.
As discussed earlier, Schedule II of the CGST Act recognises the
activity of renting or leasing buildings as a supply of service. Even
the activity of the construction of a building intended for sale is a
supply of service if the total consideration is accepted before the
completion certificate is granted. Therefore, if a building qualifies to
be a plant, ITC can be availed against the supply of services in the
form of renting or leasing the building or premises, provided the other
terms and conditions of the CGST Act and Rules framed thereunder
are fulfilled. Therefore, the argument regarding breaking the chain
cannot be accepted in its entirety. However, if the construction of a
building by the recipient of service is for his own use, the chain will
break, and therefore, ITC would not be available.
54. One of the arguments of learned ASG was that if different meanings
were given to the words “plant and machinery” and “plant or
machinery”, it could result in discriminatory treatment. Clause (c) of
Section 17(5) operates in a completely different field, as it applies only
to works contract services supplied for the construction of immovable
property. Clause (d) deals with services received by a taxable person
for the construction of an immovable property on his own account.
As clauses (c) and (d) operate in substantially different areas, the
argument of ASG relying on discrimination cannot be accepted.
55. Under the CGST Act, as observed earlier, renting or leasing immovable
property is deemed to be a supply of service, and it can be taxed
as output supply. Therefore, if the building in which the premises
are situated qualifies for the definition of plant, ITC can be allowed
on goods and services used in setting up the immovable property,
which is a plant.
56. In the main appeal, which is the subject matter of this group, the
High Court has not decided whether the mall in question will satisfy
the functionality test of being a plant. The reason is that the High
Court has done the exercise of reading down the provision. Each
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mall is different. Therefore, in each case, fact-finding enquiry is
contemplated. Thus, in the facts of the case, we will have to send
the case back to the High Court to decide whether, on facts, the mall
in question satisfies the functionality test so that it can be termed as
a plant within the meaning of bracketed portion in Section 17(5)(d).
The same applies to warehouses or other buildings except hotels and
cinema theatres. A developer may construct a mall predominantly
to sell the premises therein after obtaining an occupation certificate.
Therefore, it will be out of the purview of clause 5(b) of Schedule II.
Each case will have to be tested on merits as the question whether
an immovable property or a building is a plant is a factual question
to be decided.
CONSTITUTIONAL VALIDITY CHALLENGE
57. Now, we turn to the issue of constitutional validity challenge. While
dealing with the issue of the constitutional validity of clauses (c) and (d)
of Section 17(5) of the CGST Act, it is necessary to consider the law
laid down by this Court in paragraphs 104 to 110 of the decision in
the case of VKC Footsteps26 which read thus:
“104. As a matter of first principle, it is not possible to
accept the premise that the guiding principles which impart
a measure of flexibility to the legislature in designing
appropriate classifications for the purpose of a fiscal
regime should be confined only to the revenue harvesting
measures of a statute. The precedents of this Court
provide abundant justification for the fundamental
principle that a discriminatory provision under tax
legislation is not per se invalid. A cause of invalidity
arises where equals are treated as unequally and
unequals are treated as equals. Both under the
Constitution and the CGST Act, goods and services
and input goods and input services are not treated
as one and the same and they are distinct species.
105. Parliament engrafted a provision for refund
Section 54(3). In enacting such a provision, Parliament
is entitled to make policy choices and adopt
appropriate classifications, given the latitude which
our constitutional jurisprudence allows it in matters
involving tax legislation and to provide for exemptions,
[2024] 10 S.C.R. 849

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

concessions and benefits on terms, as it considers
appropriate. The consistent line of precedent of this Court
emphasises certain basic precepts which govern both
judicial review and judicial interpretation of tax legislation.
These precepts are:
105.1. Selecting the objects to be taxed, determining
the quantum of tax, legislating for the conditions
for the levy and the socio-economic goals which a
tax must achieve are matters of legislative policy.
M. Hidayatullah, C.J., speaking for the Constitution Bench
in Commr. of Urban Land Tax v. Buckingham & Carnatic Co.
Ltd. [Commr. of Urban Land Tax v. Buckingham & Carnatic
Co. Ltd. (1969) 2 SCC 55] held : (SCC p. 67, para 10)
“10. … The objects to be taxed, the quantum of
tax to be levied, the conditions subject to which
it is levied and the social and economic policies
which a tax is designed to subserve are all
matters of political character and these matters
have been entrusted to the legislature and not to
the courts. In applying the test of reasonableness it
is also essential to notice that the power of taxation
is generally regarded as an essential attribute of
sovereignty and constitutional provisions relating to
the power of taxation are regarded not as grant of
power but as limitation upon the power which would
otherwise be practically without limit.”
105.2. The same principle has been reiterated in Federation
of Hotel & Restaurant Assn. of India v. Union of India
[Federation of Hotel & Restaurant Assn. of India v. Union
of India (1989) 3 SCC 634], where M.N. Venkatachaliah, J.
(as the learned Chief Justice then was), speaking for the
Constitution Bench held : (SCC pp. 658-59, paras 46-47)
“46. It is now well settled that though taxing laws
are not outside Article 14, however, having regard
to the wide variety of diverse economic criteria
that go into the formulation of a fiscal policy
legislature enjoys a wide latitude in the matter of
selection of persons, subject-matter, events, etc.
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for taxation. The tests of the vice of discrimination
in a taxing law are, accordingly, less rigorous. In
examining the allegations of a hostile, discriminatory
treatment what is looked into is not its phraseology,
but the real effect of its provisions. A legislature does
not, as an old saying goes, have to tax everything in
order to be able to tax something. If there is equality
and uniformity within each group, the law would not
be discriminatory. Decisions of this Court on the
matter have permitted the legislatures to exercise an
extremely wide discretion in classifying items for tax
purposes, so long as it refrains from clear and hostile
discrimination against particular persons or classes.
47. But, with all this latitude certain irreducible
desiderata of equality shall govern classifications for
differential treatment in taxation laws as well. The
classification must be rational and based on some
qualities and characteristics which are to be found
in all the persons grouped together and absent in
the others left out of the class. But this alone is not
sufficient. Differentia must have a rational nexus with
the object sought to be achieved by the law. The
State, in the exercise of its governmental power, has,
of necessity, to make laws operating differently in
relation to different groups or classes of persons to
attain certain ends and must, therefore, possess the
power to distinguish and classify persons or things.
It is also recognised that no precise or set formulae
or doctrinaire tests or precise scientific principles of
exclusion or inclusion are to be applied. The test could
only be one of palpable arbitrariness applied in the
context of the felt needs of the times and societal
exigencies informed by experience.”
105.3. In matters of classification, involving fiscal
legislation, the legislature is permitted a larger
discretion so long as there is no transgression of
the fundamental principle underlying the doctrine of
classification. In Hiralal Rattanlal [Hiralal Rattanlal v.
State of U.P. (1973) 1 SCC 216 : 1973 SCC (Tax) 307],
[2024] 10 S.C.R. 851

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

K.S. Hegde, J., speaking for a four-Judge Bench observed :
(SCC p. 223, para 20)
“20. It must be noticed that generally speaking the
primary purpose of the levy of all taxes is to raise
funds for public good. Which person should be
taxed, what transaction should be taxed or what
goods should be taxed, depends upon social,
economic and administrative considerations. In a
democratic set up it is for the legislature to decide
what economic or social policy it should pursue or
what administrative considerations it should bear in
mind. The classification between the processed or
split pulses and unprocessed or unsplit pulses is
a reasonable classification. It is based on the use
to which those goods can be put. Hence, in our
opinion, the impugned classification is not violative
of Article 14.”
105.4. More recently in Union of India v. Nitdip Textile
Processors (P) Ltd. [Union of India v. Nitdip Textile
Processors (P) Ltd. (2012) 1 SCC 226], a two-Judge
Bench observed : (SCC p. 255, para 67)
“67. It has been laid down in a large number of
decisions of this Court that a taxation statute, for
the reasons of functional expediency and even
otherwise, can pick and choose to tax some.
A power to classify being extremely broad and
based on diverse considerations of executive
pragmatism, the judicature cannot rush in where
even the legislature warily treads. All these
operational restraints on judicial power must
weigh more emphatically where the subject is
taxation. Discrimination resulting from fortuitous
circumstances arising out of particular situations,
in which some of the taxpayers find themselves,
is not hit by Article 14 if the legislation, as such,
is of general application and does not single
them out for harsh treatment. Advantages or
disadvantages to individual assessees are
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accidental and inevitable and are inherent in every
taxing statute as it has to draw a line somewhere
and some cases necessarily fall on the other side
of the line.”
106. The principles governing a benefit, by way of a refund
of tax paid, may well be construed on an analogous frame
with an exemption from the payment of tax or a reduction
in liability (CCT v. Dharmendra Trading Co. [CCT v.
Dharmendra Trading Co. (1988) 3 SCC 570 : 1988 SCC
(Tax) 432]).
107. In Elel Hotels & Investments Ltd. v. Union of India
[Elel Hotels & Investments Ltd. v. Union of India (1989) 3
SCC 698], M.N. Venkatachaliah, J. (as the learned Chief
Justice then was) held that : (SCC p. 708, para 20)
“20. … It is now well settled that a very wide
latitude is available to the legislature in the matter
of classification of objects, persons and things
for purposes of taxation. It must need to be so,
having regard to the complexities involved in the
formulation of a taxation policy. Taxation is not
now a mere source of raising money to defray
expenses of Government. It is a recognised
fiscal tool to achieve fiscal and social objectives.
The differentia of classification presupposes and
proceeds on the premise that it distinguishes and
keeps apart as a distinct class hotels with higher
economic status reflected in one of the indicia of
such economic superiority. The presumption of
constitutionality has not been dislodged by the
petitioners by demonstrating how even hotels, not
brought into the class, have also equal or higher
chargeable receipts and how the assumption of
economic superiority of hotels to which the Act is
applied is erroneous or irrelevant.”
108. In Spences Hotel (P) Ltd. v. State of W.B. [Spences
Hotel (P) Ltd. v. State of W.B. (1991) 2 SCC 154], a two-
Judge Bench, speaking through K.N. Saikia, J. revisited
the precedents of this Court governing the principles of
[2024] 10 S.C.R. 853

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

classification in tax legislation and held : (SCC pp. 168-
69, para 24)
“24. … The history of taxation is one of evolution
as is the case in all human affairs. Its progress is
one of constant growth and development in keeping
with the advancing economic and social conditions;
and the fiscal intelligence of the State has been
advancing concomitantly, subjecting by new means
and methods hitherto untaxed property, income,
service and provisions to taxation. With the change
of scientific, commercial and economic conditions and
ways of life new species of property, both tangible
and intangible gaining enormous values have come
into existence and new means of reaching and
subjecting the same to contribute towards public
finance are being developed, perfected and put into
practical operation by the legislatures and courts of
this country, of course within constitutional limitations.”
109. The Court held that the principle of equality does not
preclude the classification of property, trade, profession
and events for taxation — subjecting one kind to one rate
of taxation and another to a different rate. The State may
exempt certain classes of property from any taxation at all
and impose different specific taxes upon different species
which it seeks to regulate. The Court held : (Spences Hotel
case [Spences Hotel (P) Ltd. v. State of W.B. (1991) 2
SCC 154], SCC p. 171, para 27)
“27. ‘Perfect equality in taxation has been said
time and again, to be impossible and unattainable.
Approximation to it is all that can be had. Under any
system of taxation, however, wisely and carefully
framed, a disproportionate share of the public burdens
would be thrown on certain kinds of property, because
they are visible and tangible, while others are of a
nature to elude vigilance. It is only where statutes
are passed which impose taxes on false and unjust
principle, or operate to produce gross inequality,
so that they cannot be deemed in any just sense
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proportional in their effect on those who are to bear
the public charges that courts can interpose and
arrest the course of legislation by declaring such
enactments void.’ ‘Perfectly equal taxation’, it has
been said, ‘will remain an unattainable good as long
as laws and government and man are imperfect.’
‘Perfect uniformity and perfect equality of taxation’,
in all the aspects in which the human mind can view
it, is a baseless dream.’
110. Parliament while enacting the provisions of
Section 54(3), legislated within the fold of the GST
regime to prescribe a refund. While doing so, it has
confined the grant of refund in terms of the first proviso
to Section 54(3) to the two categories which are governed
by clauses (i) and (ii). A claim to refund is governed by
statute. There is no constitutional entitlement to seek a
refund. Parliament has in clause (i) of the first proviso
allowed a refund of the unutilised ITC in the case of
zero-rated supplies made without payment of tax. Under
clause (ii) of the first proviso, Parliament has envisaged a
refund of unutilised ITC, where the credit has accumulated
on account of the rate of tax on inputs being higher than
the rate of tax on output supplies. When there is neither
a constitutional guarantee nor a statutory entitlement to
refund, the submission that goods and services must
necessarily be treated on a par on a matter of a refund of
unutilised ITC cannot be accepted. Such an interpretation,
if carried to its logical conclusion would involve unforeseen
consequences, circumscribing the legislative discretion
of Parliament to fashion the rate of tax, concessions and
exemptions. If the judiciary were to do so, it would run
the risk of encroaching upon legislative choices, and on
policy decisions which are the prerogative of the executive.
Many of the considerations which underlie these choices
are based on complex balances drawn between political,
economic and social needs and aspirations and are a result
of careful analysis of the data and information regarding
the levy of taxes and their collection. That is precisely
the reason why courts are averse to entering the area of
[2024] 10 S.C.R. 855

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

policy matters on fiscal issues. We are therefore unable
to accept the challenge to the constitutional validity of
Section 54(3).”
(emphasis added)
Paragraph 142 of the decision reads thus:
“142. The above judicial precedents indicate that in the
field of taxation, this Court has only intervened to read
down or interpret a formula if the formula leads to absurd
results or is unworkable. In the present case however, the
formula is not ambiguous in nature or unworkable, nor
is it opposed to the intent of the legislature in granting
limited refund on accumulation of unutilised ITC. It is
merely the case that the practical effect of the formula
might result in certain inequities. The reading down of the
formula as proposed by Mr Natarjan and Mr Sridharan by
prescribing an order of utilisation would take this Court
down the path of recrafting the formula and walk into
the shoes of the executive or the legislature, which is
impermissible. Accordingly, we shall refrain from replacing
the wisdom of the legislature or its delegate with our own
in such a case. However, given the anomalies pointed
out by the assessees, we strongly urge the GST Council
to reconsider the formula and take a policy decision
regarding the same.”
At this stage, it will be also necessary to consider the decision of
this Court in the case of Nitdip Textiles.8 In paragraph 66, this
Court held thus:
“66. To sum up, Article 14 does not prohibit reasonable
classification of persons, objects and transactions by the
legislature for the purpose of attaining specific ends. To
satisfy the test of permissible classification, it must not
be “arbitrary, artificial or evasive” but must be based on
some real and substantial distinction bearing a just and
reasonable relation to the object sought to be achieved
by the legislature. The taxation laws are no exception to
the application of this principle of equality enshrined in
Article 14 of the Constitution of India. However, it is well
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settled that the legislature enjoys very wide latitude in the
matter of classification of objects, persons and things for
the purpose of taxation in view of inherent complexity of
fiscal adjustment of diverse elements. The power of the
legislature to classify is of wide range and flexibility
so that it can adjust its system of taxation in all proper
and reasonable ways. Even so, large latitude is allowed
to the State for classification upon a reasonable basis
and what is reasonable is a question of practical
details and a variety of factors which the court will
be reluctant and perhaps ill-equipped to investigate.”
(emphasis added)
Apart from these decisions, there are other binding decisions which
hold that the laws relating to economic activities should be viewed
with greater latitude than laws touching civil rights such as freedom of
speech, religion, etc. In the present case, the legislature was dealing
with a complex issue. Therefore, greater freedom and greater play
in the joints has to be allowed to the legislature.
58. Essentially, the challenge to constitutional validity is that, in the present
case, the provisions do not meet the test of reasonable classification,
which is a part of Article 14 of the Constitution of India. To satisfy
the test, there must be an intelligible differentia forming the basis of
the classification, and the differentia should have a rational nexus
with the object of legislation. The Union of India rightly contends that
immovable property and immovable goods for the purpose of GST
constitute a class by themselves. Clauses (c) and (d) of Section 17(5)
apply only to this class of cases. The right of ITC is conferred only
by the Statute; therefore, unless there is a statutory provision, ITC
cannot be enforced. It is a creation of a statute, and thus, no one
can claim ITC as a matter of right unless it is expressly provided
in the statute. It cannot be disputed that the legislature can always
carve out exceptions to the entitlement of ITC under Section 16 of
the CGST Act.
59. Therefore, the cases covered by clauses (c) and (d) of Section 17(5)
are entirely distinct from the other cases. This appears to be done
to ensure the object of not encroaching upon the State’s legislative
powers under Entry 49 of List II. Therefore, it is not possible to
[2024] 10 S.C.R. 857

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

accept the submission that the difference is not intelligible and has
no nexus to the object sought to be achieved. Moreover, to decide
why transactions covered by clauses (c) and (d) are separately
classified, the Court will have to go into complex questions involving
fiscal adjustments of diverse elements. The Court has no experience
or expertise to embark upon the said exercise.
60. We fail to understand the argument that the classification is
underinclusive and creates discrimination. In this case, equals are
not being treated as unequals. The test of vice of discrimination in
taxing law is less rigorous. Ultimately, the legislature was dealing
with a complex economic problem. By no stretch of the imagination,
clauses (c) and (d) of Section 17(5) can be said to be discriminatory.
No amount of verbose and lengthy arguments will help the assessees
prove the discrimination. In the circumstances, it is not possible for
us to accept the plea of clauses (c) and (d) of Section 17(5) being
unconstitutional.
61. Though, violation of Articles 19(1)(g) and 300A has been alleged, it
is not elaborated by the assessees how such a violation is made out.
62. While dealing with a taxing statute, it can always be said that, ideally,
a particular provision ought not to have been incorporated or ought to
have been incorporated with a modification. Even if this can be said,
per se, the particular provision does not become unconstitutional.
The Court cannot impose its views on the legislature.
63. Now, we come to the challenge to sub-section (4) of Section 16 of
the CGST Act, which reads thus:
“16. Eligibility and conditions for taking input tax
credit.—
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
(4) A registered person shall not be entitled to take input
tax credit in respect of any invoice or debit note for
supply of goods or services or both after the thirtieth day
of November following the end of financial year to which
such invoice or debit note pertains or furnishing of the
relevant annual return, whichever is earlier:
Provided that the registered person shall be entitled to
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take input tax credit after the due date of furnishing of the
return under Section 39 for the month of September, 2018
till the due date of furnishing of the return under the said
section for the month of March, 2019 in respect of any
invoice or debit note for supply of goods or services or
both made during the financial year 2017-18, the details
of which have been uploaded by the supplier under sub-
section (1) of Section 37 till the due date for furnishing
the details under sub-section (1) of said section for the
month of March, 2019.”
The words “thirtieth day of November” were substituted with effect from
1st October 2022 for the words “due date of furnishing of the return
under Section 39 for the month of September”. We fail to understand
how sub-section (4) of Section 16 becomes discriminatory when the
legislature says that a registered person shall not be entitled to take
ITC in respect of any invoice or debit note for the supply of goods
or services or both after the thirtieth day of November following the
end of the financial year to which such invoice or debit note pertains
or furnishing of the relevant annual return, whichever is earlier. It
is not shown how the provision is arbitrary and discriminatory. The
fact that the provisions could have been drafted in a better manner
or more articulately is not sufficient to attract arbitrariness.
64. As we are upholding the constitutional validity of clauses (c) and (d)
of Section 17(5), and as held earlier, its plain interpretation does not
lead to any ambiguity, the question of reading down the provisions
does not arise.
65. Some of our conclusions can be summarised as under:
a. The challenge to the constitutional validity of clauses (c) and (d)
of Section 17(5) and Section 16(4) of the CGST Act is not
established;
b. The expression “plant or machinery” used in Section 17(5)(d)
cannot be given the same meaning as the expression “plant
and machinery” defined by the explanation to Section 17;
c. 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”
[2024] 10 S.C.R. 859

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

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. Functionality
test will have to be applied to decide whether a building is a
plant. Therefore, by using the functionality test, in each case,
on facts, in the light of what we have held earlier, it will have to
be decided whether the construction of an immovable property
is a “plant” for the purposes of clause (d) of Section 17(5).
66. In the light of what we have held above, by setting aside the
impugned judgment in Civil Appeal Nos. 2948 and 2949 of 2023, the
writ petitions are remanded to the High Court of Orissa for limited
purposes of deciding whether, in the facts of the case, the shopping
mall is a “plant” in terms of clause (d) of Section 17(5). Appeals are
partly allowed in above terms.
67. While deciding these cases, we cannot make any final adjudication
on the question of whether the construction of immovable property
carried out by the petitioners in Writ Petitions amounts to plant,
and each case will have to be decided on its merit by applying the
functionality test in terms of this judgment. The issue must be decided
in appropriate proceedings in which adjudication can be made on
facts. The petitioners are free to adopt appropriate proceedings or
raise the issue in appropriate proceedings.
68. The writ petitions are rejected subject to the interpretation of clause (d)
of sub-section (5) of Section 17 of the CGST Act made by us.

Result of the Case: A
ppeals partly allowed and
writ petitions rejected.

†
Headnotes prepared by: Divya Pandey