𝐒𝐚𝐟𝐚𝐫𝐢 𝐑𝐞𝐭𝐫𝐞𝐚𝐭𝐬 – 𝐌𝐨𝐬𝐭 𝐚𝐰𝐚𝐢𝐭𝐞𝐝 𝐒𝐮𝐩𝐫𝐞𝐦𝐞 𝐂𝐨𝐮𝐫𝐭 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐢𝐧 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞 𝐨𝐟 𝐈𝐓𝐂 𝐞𝐥𝐢𝐠𝐢𝐛𝐢𝐥𝐢𝐭𝐲 𝐨𝐧 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐜𝐭𝐢𝐨𝐧 𝐨𝐟 𝐬𝐡𝐨𝐩𝐩𝐢𝐧𝐠 𝐦𝐚𝐥𝐥 (𝐢𝐦𝐦𝐨𝐯𝐚𝐛𝐥𝐞 𝐩𝐫𝐨𝐩𝐞𝐫𝐭𝐲) for the purpose of letting out premises in the malls to different tenants on which GST output liability to be paid.
𝐒𝐮𝐩𝐫𝐞𝐦𝐞 𝐂𝐨𝐮𝐫𝐭𝐬 𝐬𝐞𝐭𝐬 𝐭𝐡𝐞 𝐢𝐧𝐭𝐞𝐫𝐩𝐫𝐞𝐭𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 17(5)(𝐝) 𝐭𝐨 𝐛𝐞 𝐟𝐨𝐥𝐥𝐨𝐰𝐞𝐝 𝐛𝐲 𝐚𝐩𝐩𝐥𝐲𝐢𝐧𝐠 𝐅𝐮𝐧𝐜𝐭𝐢𝐨𝐧𝐚𝐥𝐢𝐭𝐲 𝐭𝐞𝐬𝐭 𝐟𝐨𝐫 𝐝𝐞𝐜𝐢𝐝𝐢𝐧𝐠 𝐰𝐡𝐞𝐭𝐡𝐞𝐫 𝐛𝐮𝐢𝐥𝐝𝐢𝐧𝐠 𝐢𝐬 ‘𝐏𝐥𝐚𝐧𝐭’ 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐢𝐬𝐬𝐮𝐞 𝐦𝐮𝐬𝐭 𝐛𝐞 𝐝𝐞𝐜𝐢𝐝𝐞𝐝 𝐢𝐧 𝐚𝐩𝐩𝐫𝐨𝐩𝐫𝐢𝐚𝐭𝐞 𝐩𝐫𝐨𝐜𝐞𝐞𝐝𝐢𝐧𝐠𝐬 𝐢𝐧 𝐰𝐡𝐢𝐜𝐡 𝐚𝐝𝐣𝐮𝐝𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐜𝐚𝐧 𝐛𝐞 𝐦𝐚𝐝𝐞 𝐨𝐧 𝐟𝐚𝐜𝐭𝐬.
Key summary of the verdict:
➡ Constitutional validity of clauses (c) and (d) of Section 17(5) is 𝐔𝐏𝐇𝐄𝐋𝐃
➡ “plant or machinery” used in Section 17(5)(d) cannot be given the same meaning as “plant and machinery” defined by explanation to Sec 17
➡ Whether a mall, warehouse, or building can be classified as a “plant” is a 𝐟𝐚𝐜𝐭𝐮𝐚𝐥 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧 which has to be determined based on registered person’s business and role that building plays in the said business.
➡ Buildings constructed for services like renting or leasing may qualify as a ‘𝐩𝐥𝐚𝐧𝐭’, 𝐬𝐮𝐛𝐣𝐞𝐜𝐭 𝐭𝐨 𝐚 𝐟𝐮𝐧𝐜𝐭𝐢𝐨𝐧𝐚𝐥𝐢𝐭𝐲 𝐭𝐞𝐬𝐭
➡ Supreme Court 𝐫𝐞𝐦𝐚𝐧𝐝𝐞𝐝 𝐭𝐡𝐞 𝐜𝐚𝐬𝐞 𝐭𝐨 𝐭𝐡𝐞 𝐎𝐫𝐢𝐬𝐬𝐚 𝐇𝐢𝐠𝐡 𝐂𝐨𝐮𝐫𝐭 for limited purposes of deciding whether, in the facts of the case, the shopping mall is a “plant” as per Sec 17(5)(d)
Bottomline:
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.
The writ petitions are rejected, subject to the interpretation of 17(5)(d) made in the verdict by Supreme Court.