J. K. Lakshmi Cement LTD. vs. Union Of INDIA

Facts

The petitioner, J.K. Lakshmi Cement Ltd., filed a writ petition challenging the constitutional validity of clauses (c) and (d) of Section 17(5) of the Central Goods and Services Tax Act, 2017 (CGST Act). The respondents are the Union of India and the State of Chhattisgarh. The State counsel submitted that the constitutional validity of these provisions was already adjudicated 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. and others. The petitioner's counsel then sought liberty to raise the issue concerning paragraph 10.2 of their writ petition, specifically whether their case falls under Section 17(5)(d) of the CGST Act, as other than plant or machinery, and to raise this issue in appropriate proceedings, as permitted by the Supreme Court in the Safari Retreats judgment. The other respondents did not oppose this submission.

Held

The Court held that the constitutional validity of clauses (c) and (d) of Section 17(5) of the CGST Act, 2017, has been upheld by the Supreme Court in M/s Safari Retreats Private Ltd.'s case, and therefore, the challenge to their constitutional validity by the petitioner is dismissed. However, the Court, following the Supreme Court's observations, granted liberty to the petitioner to raise the specific issue of whether the construction of immovable property carried out by the petitioner amounts to a 'plant' within the meaning of Section 17(5)(d) of the CGST Act. This issue is to be decided on its merits by applying the functionality test, and the petitioner is free to adopt appropriate proceedings or raise this issue in appropriate proceedings in accordance with law. The writ petition was disposed of with these observations and directions.

Key Issues

1. Whether clauses (c) and (d) of Section 17(5) of the CGST Act, 2017, are constitutionally valid? The petitioner challenged the constitutional validity of these clauses. The respondents, relying on the Supreme Court's decision in Chief Commissioner of Central Goods and Service Tax and others v. M/s Safari Retreats Private Ltd. and others, argued that these provisions have been held to be intra vires. 2. Whether the petitioner is entitled to raise the issue of their specific case falling under Section 17(5)(d) of the CGST Act, concerning immovable property other than plant or machinery, in appropriate proceedings? The petitioner sought liberty to raise this specific factual issue, referencing the Supreme Court's liberty granted in the Safari Retreats case. The respondents did not oppose this request.