SBS Schooling Faridkot Vs State of Punjab And Others (Punjab and Haryana High Court)
In the case of SBS Schooling Faridkot vs. State of Punjab and Others, the petitioner challenged the constitutional validity of Sections 17(5)(c) and 17(5)(d) of the Central GST Act/Punjab GST Act, 2017. The Punjab and Haryana High Court referred to the Supreme Court’s decision in Chief Commissioner of Central Goods and Service Tax vs. Safari Retreats (P.) Ltd.. The Supreme Court upheld the validity of the provisions but introduced the “functionality test” to determine whether buildings, such as malls or warehouses, qualify as “plant” under Section 17(5)(d). If a building is integral to the business activity of supplying services (e.g., leasing or renting), it could be considered a plant and, therefore, eligible for input tax credit (ITC).
Applying this precedent, the High Court set aside the notice issued to SBS Schooling and remanded the case to the authorities for re-evaluation. The court directed the respondents to apply the functionality test, provide the petitioner an opportunity for a hearing, and issue a reasoned order based on their findings. The writ petition was partly allowed, emphasizing the need for case-specific analysis when interpreting GST provisions. This decision aligns with the broader guidance provided by the Supreme Court on Section 17(5)(d) of the CGST Act.
