Published On Oct 4, 2024
In the Safari Retreats Pvt. Ltd. case, the Supreme Court of India delivered a significant ruling on October 3, 2024, allowing the claim of GST Input Tax Credit (ITC) on construction costs for properties intended for rental purposes. Safari Retreats had constructed a shopping mall in Bhubaneswar, seeking ITC on the GST paid for materials like cement and steel used during construction. However, the tax authorities denied the ITC based on Section 17(5)(d) of the CGST Act, which typically disallows such claims for immovable property.
The Supreme Court ruled that if the construction of the building is essential for providing services like renting or leasing, it could fall under the "plant" exception within the CGST Act, thus allowing ITC. The decision is expected to reduce the financial burden on developers and leasing companies by preventing double taxation and ensuring they can recover taxes paid on inputs.
This ruling will likely benefit various sectors like real estate, hospitality, and co-working spaces by allowing businesses to claim ITC for buildings constructed for leasing or rental services, provided they meet the specific criteria outlined by the court.
The decision provides much-needed clarity on the interpretation of Section 17(5)(d), and it is expected to influence future rulings and business compliance strategies
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Video Timestamp
0:00 Intro to Topic
0:13 Case Law Safari Retreat Case
0:35 Intro to Case Law
1:09 Analysis of Sec 17(5)(d) Block credit
1:34 Supreme Court Ruling
2:15 implication of ruling
2:40 Case by case classification
2:52 Conclusion
4:10 Outro
