The determination of whether a building used for renting constitutes 'plant and machinery' under Section 17(5)(d) of the GST Act is a factual inquiry requiring the application of a 'functionality test' to assess the building's role in the business.

Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased topleased the petitioner prays that this Hon'ble Court may be pleased to issue a Writ or order or direction particularly one in the nature of Writ of Mandamus declaring Section 17(5)(d) of the CGST Act, 2017 / APGST Act, 2017 , in denying Input Tax Credit to the construction of immovable property which is meant for letting out or leasing our of the immovable property, as arbitrary, unjust, oppressive and is directly opposed to basic rationale of the Goods and Services Tax itself, reading down for the purpose of interpretation in continuation to give benefit to the taxable person who has paid GST and allow the claim of Input Tax Credit in respect of lease / renting out the immovable property by setting the impugned assessment order passed by the first respondent in Form GST DRC - 07, in Case Id No. AD371221003638C, dated 05.06.2023, for the tax period July, 2017, to March, 2022, and to pass

IA NO: 1 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased pleased pending disposal of the Writ Petition, grant stay collection all further proceedings arising in pursuance of the impugned assessment order passed by the first respondent in Form GST DRC - 07, in Case Id No. AD371221003638C, dated 05.06.2023, for the tax period July, 2017, to March, 2022 or to pass such further or other orders as this Hon'ble Court may deem flt and proper in the circumstances of the case. pending disposal of the above writ petition and to pass

Counsel for the Petitioner:

1. S SURI BABU

Counsel for the Respondent(S):

1. GP FOR COMMERCIAL TAX

The Court made the following Order:

(per Hon’ble Sri Justice R. Raghunandan Rao)

1. The petitioner here in, which is a registered person, had constructed a multiplex for renting out to various customers. The petitioner, sought input tax credit in relation to the taxes paid on the goods and services received in the construction of multiplex, for the year 2017-18 to 2021-2021. The assessing authority by an order dated 05.06.2023, completed the assessment for this period. In the course of such assessment, the assessing authority had held that section 17 (5) (d) of the A.P GST Act barred ITC being given in relation to inputs which go into construction of immovable property.

2. The petitioner being aggrieved by this order had approached this Court with the contention that section 17(5) (d), while barring ITC being given on goods or services received during construction on immovable property, permitted such ITC in relation to plant and machinery. It is the case of the petitioner that the said multiplex should be treated as a plant and machinery.

3. Sri.S.Suribabu, learned counsel for the petitioner who relied upon the judgment of Hon’ble Supreme Court in the case of “Chief Commissioner of central goods and service tax & Ors Vs. Safari Retreats Private Ltd. & ors” dated 03.10.2024 in the Civil Appeal.No.2948 of 2023, 2025 (2) SCC 523. The Hon’ble Supreme Court while disposing of the said Civil Appeal had held as follows :

“The question whether a mall, warehouse or any building other than a hotel or cinema theatre can be classified as a plant within the meaning of the expression “plant or machinery” used in Section 17(5)(d) is a factual question which has to be determined keeping in mind the business of the registered person and the role that building plays in the said business. If the construction of a buildi