M/S Compucom Software Limited vs. Union Of INDIA

Held

The Rajasthan High Court held that the challenge to the constitutional validity of Section 17(5)(c) and (d) of the CGST Act, 2017, is not established, as per the Supreme Court's decision in Chief Commissioner of Central Goods and Service Tax & Ors. Versus M/s Safari Retreats Private Ltd. & Ors. The Court affirmed that the expression 'plant or machinery' in Section 17(5)(d) is distinct from 'plant and machinery' as defined elsewhere. The determination of whether a building qualifies as a 'plant' under Section 17(5)(d) is a factual inquiry, requiring application of a functionality test to ascertain if the construction was essential for the registered person's business activity, particularly for supplying services related to the building. The petitions were disposed of with liberty to the petitioners to file claims for availing ITC before the respondents, to be considered in accordance with law.

Facts

The petitioner, M/s Compucom Software Limited, filed a writ petition challenging the constitutional validity of Section 17(5)(c) and (d) of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner sought to avail input tax credit (ITC) on GST paid on the purchase of land and construction thereon. The connected writ petition filed by Kamal Cogent Energy Private Limited and Rishabh Kasliwal raised similar issues. The respondents are the Union of India, GST Council, Central Board of Indirect Taxes and Customs, State of Rajasthan, and the Commissioner Goods and Services Tax.

Key Issues

1. Whether Section 17(5)(c) and (d) of the CGST Act, 2017, are constitutionally valid? The petitioner argued that these provisions, which restrict input tax credit on construction of immovable property, are arbitrary and discriminatory. The revenue contended that these provisions are a valid exercise of legislative power and are not unconstitutional. 2. Whether the construction of immovable property, such as a building, can be considered a 'plant' for the purpose of Section 17(5)(d) of the CGST Act, thereby allowing ITC? The petitioner argued that if the building functions as a plant essential for their business activity, ITC should be permissible. The revenue argued that the definition of 'plant or machinery' in Section 17(5)(d) is specific and does not extend to general construction of immovable property.