Input Tax Credit availability may be altered by a retrospective amendment redefining plant and machinery for construction credits.
The article analyzes availability of Input Tax Credit under Section 17(5)(c) and (d) of the CGST Act after the Supreme Court's Safari Retreats interpretation and the Finance Bill, 2025 proposal to retrospectively replace "plant or machinery" with "plant and machinery." It summarizes that clause (c) blocks ITC for works contract services used in construction of immovable property except when used to further supply such services, while clause (d) blocks ITC for construction on a taxable person's "own account" except where the construction concerns a "plant or machinery" or is not on the person's own account. The article identifies the Court's tests for treating a building as "plant" and flags unresolved issues including the meaning of "own account," ancillary pre-construction credits, and overlap between clauses (c) and (d). (AI Summary)

Input Tax Credit on construction: functionality of a building determines eligibility for credit on construction inputs.
Availability of Input Tax Credit for construction-related goods and services turns on whether the asset qualifies as plant or plant or machinery. The analysis stresses the legislature's distinct use of those expressions, the applicability of a functionality test to treat a building as "plant" when constructed to meet special technical or revenue generating requirements, and the resulting case by case inquiry for credits on works contract services and separately procured goods or services. (AI Summary)

Extended warranty classification: treated as composite supply if sold by manufacturer at sale, otherwise as assurance service.
Manufacturers' free repairs or replacements during the original warranty period attract no GST and do not require reversal of ITC; manufacturers' stock replenishment to distributors for warranty replacements likewise attracts no GST. Distributors who procure parts from third parties and invoice manufacturers for reimbursement, or distributors who invoice manufacturers for repair services provided on their behalf, must discharge GST; manufacturers may claim ITC on such invoices. Extended warranty sold by the manufacturer at sale is classified as a composite supply taxed at the rate of the goods, whereas third-party or post-sale extended warranty is a separate assurance service taxed at the assurance-service rate. (AI Summary)