In the aftermath of the Supreme Court’s landmark Safari Retreats judgment—which remanded the matter to the High Court to decide whether the construction of an immovable property qualifies as a “plant” for the purpose of claiming Input Tax Credit (ITC)—several High Courts and Advance Ruling Authorities across India have invoked the decision while ruling on diverse GST disputes.

Madhya Pradesh High Court: ITC on Leasing Building for School

The Madhya Pradesh High Court, while hearing a petition on ITC eligibility for leasing out a building to run a school, directed the assessee to avail of the statutory remedy under GST law, citing the Safari Retreats judgment. The petitioner had sought clarity on the applicability of ITC for such leasing arrangements.

Chhattisgarh High Court: J.K. Lakshmi Cement Petition Dismissed

In another case, the Chhattisgarh High Court dismissed the writ petition filed by J.K. Lakshmi Cement Ltd., which challenged the constitutional validity of clauses (c) and (d) of Section 17(5) of the CGST Act. These clauses pertain to the ineligibility of ITC on works contract services and goods/services used for the construction of immovable property. The court relied on the Safari Retreats judgment to uphold the statutory restrictions.

Gujarat AAAR: No ITC on Surrender of Leasehold Rights

The Gujarat Appellate Authority for Advance Ruling (AAAR) ruled that ITC cannot be claimed on services involving the surrender or relinquishment of rights on leasehold property. The bench, comprising Rajeev Topno and B.V. Siva Naga Kumari, upheld the AAR’s decision that GNAL was not entitled to ITC on GST paid for services provided by GACL in surrendering its leasehold rights, relying on the Safari Retreats principle.

Gujarat AAAR: ITC Allowed on Concrete Tower for VCV Lines

In contrast, the Gujarat AAAR allowed ITC for inputs and services used in constructing a concrete tower to support and erect VCV lines at a manufacturing facility for EHV cables. The authority noted that such construction fell within the explanation to Section 17(5)(d) of the CGST Act, 2017, making the credit permissible. The decision once again drew from the interpretative guidance in Safari Retreats.

Broader Implications

The Safari Retreats judgment has emerged as a touchstone for ITC disputes involving immovable property construction and related rights. With divergent outcomes depending on the nature of the property and use, courts and authorities continue to apply the precedent to navigate the complex provisions of Section 17(5) of the CGST Act.