J.K. Lakshmi Cement Ltd. Vs Union of India (Chhattisgarh High Court)
J.K. Lakshmi Cement Ltd. filed a writ petition before the Chhattisgarh High Court challenging the constitutional validity of clauses (c) and (d) of Section 17(5) of the Central Goods and Services Tax (CGST) Act, 2017. These clauses pertain to restrictions on claiming input tax credit (ITC) on certain goods and services, including those related to construction activities. The petitioner argued that these provisions were unconstitutional, but the government advocate pointed out that the issue had already been settled by the Supreme Court in the case of Chief Commissioner of Central Goods and Service Tax and others v. M/s Safari Retreats Private Ltd..
The Chhattisgarh High Court acknowledged the Supreme Court’s decision, which upheld the validity of clauses (c) and (d) of Section 17(5). The Supreme Court’s ruling had already addressed the constitutional challenge, declaring that the clauses were intra vires (constitutional) and not invalid. However, the Supreme Court also left open the question of whether immovable property, such as buildings, could be classified as “plant” for the purposes of Section 17(5)(d) of the CGST Act, based on a functionality test. This test determines if the property serves an essential role in the business activities of the taxpayer.
