Under Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) input tax credit (‘ITC’) is not allowed on goods or services received by a taxable person for construction of an immovable property (other than plant or machinery) including when such goods or services are used in the course or furtherance of a business.

However, recently, the Orissa High Court[1] has allowed ITC on inputs and input services used for construction of a shopping mall wherein such mall is intended to be let-out upon construction, on the following grounds: (i) The very purpose of the Goods and Services Tax (‘GST’) regime is to prevent cascading of taxes, which objective should not be frustrated by adopting a narrow interpretation of the aforesaid Section 17(5)(d) of the CGST Act; and (ii) the shopping mall would not be used for personal business, and would instead be let-out, which is an activity covered under GST.

[1] Safari Retreats Private Limited, W.P. (C) No. 20463 of 2018.