Chief Commissioner of Central Goods and Service Tax Vs Safari Retreats Private Limited

The Supreme Court of India dismissed a review petition by the Chief Commissioner of Central Goods and Service Tax regarding a prior judgment on May 20, 2025. This judgment affirmed a ruling made in the case of Chief Commissioner of Central Goods and Service Tax & Ors. Vs Safari Retreats Private Limited & Ors. (Civil Appeal No. 2948 of 2023), which had significant implications for Input Tax Credit (ITC) related to the construction of immovable properties. The Supreme Court had introduced a "functionality test" to determine ITC eligibility for costs incurred on properties, which assesses whether the property is essential to the business and contributes to generating taxable supplies. M/s Safari Retreats Pvt. Ltd. was initially denied ITC on constructing a shopping mall for commercial leasing due to the application of Section 17(5)(d). The Supreme Court remitted the case back to the Orissa High Court for assessing if the shopping mall could qualify as “plant” under this new test. The court reiterated the importance of demonstrating a direct link between the property and business operations to qualify for ITC, indicating a potential shift in how tax credits are approached within commercial real estate. This decision reinforces the seamless input credit flow objective of GST while suggesting that the GST Council may need to review the relevant provisions for clarity and resolution of inconsistencies.