Dismissed

J. K. Lakshmi Cement Ltd. v. Union of India

Chhattisgarh HC13 Nov 2024WPC/2460/2020

Case brief

AI extract

What is this about?

The Division Bench dismissed a writ petition challenging the constitutional validity of specific clauses of the CGST Act. Relying on a prior Supreme Court judgment upholding these clauses, the court upheld the provision but granted liberty to the petitioner to raise factual issues regarding plant classification in appropriate proceedings.

What did the court decide?

Liberty granted to petitioner to raise the issue of plant classification in appropriate proceedings; writ petition dismissed.

J. K. Lakshmi Cement Ltd. Vs Union of India — GST and Indirect Tax | Chhattisgarh HC (2024)

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{W.P.(C)No.2460/2020}

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Digitally signed by SISTA SISTA SOMAYAJULU SOMAYAJULU Date: 2024.11.18 14:57:54 +0530

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2024:CGHC:44501-DB

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NAFR

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HIGH COURT OF CHHATTISGARH AT BILASPUR

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WPC No. 2460 of 2020

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J.K. Lakshmi Cement Ltd., Through the General Manager (Accounts), Village Malpurikhurd, Khasdih, Ahiwara, District Durg, Chhattisgarh.

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... Petitioner

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versus

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Union of India, Through the Ministry of Finance, Department of Revenue, North Block, New Delhi – 110001.

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State of Chhattisgarh, Through the Secretary, Department of Finance, Mantralaya, Mahanadi Bhawan, Naya Raipur, District Raipur, Chhattisgarh.

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Commissioner, Commercial Tax, GST North Block, Sector 19, Atal Nagar, Nawa Raipur, District Raipur, Chhattisgarh.

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... Respondents

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For Petitioner : Mr. N. Naha Roy, Advocate. For Respondent No.1 : Mr. Ramakant Mishra, Deputy Solicitor General of India and Ms. Annapurna Tiwari, Advocate. For Respondents No.2 & 3 : Mr. Rahul Tamaskar, Government Advocate.

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Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Radhakishan Agrawal, JJ.

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Order On Board

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(14/11/2024)

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Sanjay K. Agrawal, J.

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The petitioner herein has filed this writ petition challenging the constitutional validity of clauses (c) & (d) of Section 17(5) of the Central Goods and Services Tax Act, 2017 (for short, ‘the CGST’ Act).

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{W.P.(C)No.2460/2020}

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At the outset, Mr. Rahul Tamaskar, learned Government Advocate appearing for the State / respondents No.2 & 3, submits that the constitutional validity of clauses (c) & (d) of Section 17(5) of the CGST Act has been adjudicated by the Supreme Court in the matter of Chief

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Commissioner of Central Goods and Service Tax and others v. M/s Safari Retreats Private Ltd. and others 1.

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However, Mr. N. Naha Roy, learned counsel appearing for the petitioner, submits that the constitutional validity of the above provisions has already been adjudicated by the Supreme Court and held to be intra vires, therefore, the petitioner be granted liberty to raise the issue with regard to paragraph 10.2 of the writ petition i.e. his case is covered under Section 17(5)(d) of the CGST Act, (other than plant or machinery) and as such, he be given liberty to raise the issue in appropriate proceeding as granted by their Lordships of the Supreme Court in the aforesaid judgment.

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The learned Deputy Solicitor General of India and the learned State counsel have not opposed the submission of learned counsel for the petitioner.

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We have heard learned counsel for the parties and considered their submissions and also went through the material available on record carefully and meticulously as well.

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The Supreme Court in M/s Safari Retreats Private Ltd.’s case (supra) has considered the issue and held clauses (c) & (d) of Section 17(5) of

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1 2024 INSC 756

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{W.P.(C)No.2460/2020}

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the CGST Act to be intra vires and not unconstitutional, and observed in

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paragraphs 65 to 68 as under: -

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“65. Some of our conclusions can be summarised as under:

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a. The challenge to the constitutional validity of clauses (c) and (d) of Section 17(5) and Section 16(4) of the CGST Act is not established;

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b. The expression “plant or machinery” used in Section 17(5)(d) cannot be given the same meaning as the expression “plant and machinery” defined by the explanation to Section 17;

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c. The question whether a mall, warehouse or any building other than a hotel or a cinema theatre can be classified as a plant within the meaning of the expression “plant or machinery” used in Section 17(5)(d) is a factual question which has to be determined keeping in mind the business of the registered person and the role that building plays in the said business. If the construction of a building was essential for carrying out the activity of supplying services, such as renting or giving on lease or other transactions in respect of the building or a part thereof, which are covered by clauses (2) and (5) of Schedule II of the CGST Act, the building could be held to be a plant. Then, it is taken out of the exception carved out by clause (d) of Section 17(5) to sub-section (1) of Section 16. Functionality test will have to be applied to decide whether a building is a plant. Therefore, by using the functionality test, in each case, on facts, in the light of what we have held earlier, it will have to be decided whether the construction of an immovable property is a “plant” for the purposes of clause (d) of Section 17(5).

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In the light of what we have held above, by setting aside the impugned judgment in Civil Appeal Nos.2948 and 2949 of 2023, the writ petitions are remanded to the High Court of Orissa for limited purposes of deciding whether, in the facts of the case, the shopping mall is a “plant” in terms

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{W.P.(C)No.2460/2020}

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of clause (d) of Section 17(5). Appeals are partly allowed in above terms.

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While deciding these cases, we cannot make any final adjudication on the question of whether the construction of immovable property carried out by the petitioners in Writ Petitions amounts to plant, and each case will have to be decided on its merit by applying the functionality test in terms of this judgment. The issue must be decided in appropriate proceedings in which adjudication can be made on facts. The petitioners are free to adopt appropriate proceedings or raise the issue in appropriate proceedings.

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The writ petitions are rejected subject to the interpretation of clause (d) of sub-section (5) of Section 17 of the CGST Act made by us.”

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However, their Lordships in M/s Safari Retreats Private Ltd.’s case (supra) further held that the question whether the construction of immovable property carried out by the petitioners therein amounts to plant has to be decided on its merit by applying the functionality test in terms of the judgment passed in the aforesaid case. Their Lordships also held that the issue must be decided in appropriate proceedings in which adjudication can be made on facts and granted liberty to the petitioners therein to adopt appropriate proceedings or raise the issue in appropriate proceedings.

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In that view of the matter, while dismissing the present writ petition qua the constitutional validity of clauses (c) & (d) of Section 17(5) of the CGST Act, liberty is reserved in favour of the petitioner to raise the issue whether the construction of immovable property carried out by the petitioner amounts to plant within the meaning of Section 17(5)(d) (plant) of Act of 2017. The petitioner is free to adopt appropriate

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{W.P.(C)No.2460/2020}

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proceedings or raise the issue in appropriate proceedings, in accordance

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with law.

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