TaxTMI 
TaxTMI 
Supreme Court Judgement on clauses (c) & (d) of Subsection (5) of Section 17 of CGST Act
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....ms to have accumulated input credit of GST exceeding Rs. 34 crores due to goods and services consumed in the construction - The Tax Payers rental income from letting out units in the mall is also subject to CGST - The respondent wishes to utilize the accumulated Input Tax Credit (ITC) against this rental income, but was advised to pay GST on the rent without any deduction for ITC because of the exception in Section 17(5)(d) - Consequently the Tax Payer, filed a writ petition in Orissa High Court seeking a declaration that Section 17(5)(d) does not apply to construction intended for letting out- Alternatively if the bar is applicable, the tax payer contended that the same is unconstitutional under Article 14 and 19 (1) (g) of the constitutio....
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....rve 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 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 t....
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....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. 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. 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 th....
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.... 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. 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 accept the submission that the difference is not intelligible and has no nexus to the object sought to be achieved. Moreover, to de....
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....rn 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; As we are upholding the constitutional validity of clauses (....
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....14 of Constitution of India and the contention of Union of India that Immovable Property & Immovable goods constitutes a Class by themselves for the purpose of GST is correct and right of ITC is conferred only by the statute. vii) Argument of classification is underinclusive & discriminatory is not proved. Hence Section 17(5) is not unconstitutional. viii) Violation of Articles 19(1)(g) and 300(A) is not elaborated. ix) That, Section16(4) is neither arbitrary nor discriminatory. The Honourable Supreme Court has upheld the constitutional validity of Sections 16 and Section 17 of GST Act. It is also pertinent to note that, SC has directed the HC concerned to look into the matter of functionality test i.e whether a building satisfies th....