Intro
The dismissal of the review petition in the Safari Retreats Pvt Ltd v. Chief Commissioner of CGST case has raised fresh doubts among taxpayers. However, legal experts confirm that the Safari Retreat ruling has no impact on the 2023 amendment to Section 17(5) of the CGST Act, which restricts ITC on immovable property.
What was the Safari Retreats case?
The case revolved around whether input tax credit (ITC) can be claimed on construction expenses for immovable property (like malls, offices) that are subsequently rented out.
- The Orissa High Court in 2019 ruled in Safari Retreats‘ favour
- It allowed ITC on such property if used for further business (like leasing)
- This was seen as an exception to Section 17(5)(d) of CGST Act
But this ruling was never adopted as a general law across India and did not invalidate the CGST provision.
GST Amendment of 2023: What Changed?
The Finance Act, 2023 amended Section 17(5)(c) and (d) of the CGST Act to clarify the restriction on ITC related to:
| Item | ITC Allowed? | Notes |
|---|---|---|
| Construction of immovable property | ❌ | Even if used for renting, sale, lease |
| Purchase of immovable property | ❌ | Unless for further supply of works contract |
| Repairs to existing commercial property | ✅ | If used for business |
The amendment was clarificatory and retrospective, meaning it applies even to prior years.
Review Petition: Supreme Court’s Latest Stand
- Safari Retreats filed a review petition against the Supreme Court’s 2022 dismissal of its SLP
- The Supreme Court on May 2024 dismissed the review petition as well
- Hence, no change in legal position under GST law
Key takeaway: The Safari Retreat decision does not override statutory GST provisions.
Legal Expert Insight
“Courts cannot rewrite taxation statutes. The Safari ruling was limited and context-based. The 2023 amendment ensures clarity and restricts ITC on immovable assets even for leasing,”
— Tax Counsel appearing before SC in GST disputes
What Taxpayers Should Note
- Don’t rely on Safari Retreat ruling for ITC claims
- Follow amended Section 17(5) as clarified in Budget 2023
- Claim ITC only if your case falls outside the blocked credit conditions
FAQ
Q1: Can I claim ITC for commercial property construction if I lease it out?
No. The 2023 amendment to Section 17(5) blocks such credit explicitly.
Q2: Was the Safari Retreat judgment overruled?
Not formally, but its interpretation was limited and later dismissed at review.
Q3: Is the GST amendment retrospective?
Yes, as per legal interpretation and government clarification, the 2023 amendment applies retrospectively.
Summary
The Supreme Court dismissed the Safari Retreats review petition, but this doesn’t alter the legal restriction on GST ITC under Section 17(5). Budget 2023 amendments continue to block credit on immovable property construction, even if leased out.