GST Authorities Issue Notices to Developers Over Rs 35 Billion Claims

23 Dec 2024 CW Team

These notices follow a Supreme Court ruling in October regarding Safari Retreats, which allowed commercial real estate companies to claim ITC on construction costs for rental buildings.

The GST authorities have sought the refund of ITC from the developers, arguing that the credits were wrongly claimed, and in some cases, they have blocked the credit claims altogether. A developer who received a notice mentioned that the notices were causing significant confusion among industry players.

The Supreme Court had upheld the constitutional validity of the relevant provisions while emphasizing that eligibility for ITC should be determined on a case-by-case basis, based on the "essentiality" and "functionality" tests. The Court also specified that two conditions must be met to avail tax credit: the property must either be leased out or sold before construction is complete, and it must qualify as "plant or machinery."

Authorities stated that credits claimed by real estate companies would be deemed eligible once it is conclusively established that they meet the functionality and essentiality tests outlined by the Supreme Court.

Many developers have already approached the court in response to these notices, claiming that tax officials are misusing the provision to block and deny ITC. Tax officials explained that they are carefully reviewing ITC claims to prevent potential misuse. Abhishek A. Rastogi, the founder of Rastogi Chambers, argued that a scientific and objective mechanism must be applied uniformly to determine eligibility, in order to avoid unjustly denying rightful credits.

He also pointed out that in certain cases, authorities are interpreting the Supreme Court's findings as applying only to the petitioners in the Safari Retreats case. He stated that this interpretation is flawed, as judicial precedents are binding and should be applied uniformly to all taxpayers in similar situations across the industry.

Several property developers have reportedly received show-cause notices from the Goods and Services Tax (GST) authorities, questioning their claims for input tax credit (ITC) amounting to approximately Rs 35 billion, according to sources familiar with the matter. These notices follow a Supreme Court ruling in October regarding Safari Retreats, which allowed commercial real estate companies to claim ITC on construction costs for rental buildings. The GST authorities have sought the refund of ITC from the developers, arguing that the credits were wrongly claimed, and in some cases, they have blocked the credit claims altogether. A developer who received a notice mentioned that the notices were causing significant confusion among industry players. The Supreme Court had upheld the constitutional validity of the relevant provisions while emphasizing that eligibility for ITC should be determined on a case-by-case basis, based on the essentiality and functionality tests. The Court also specified that two conditions must be met to avail tax credit: the property must either be leased out or sold before construction is complete, and it must qualify as plant or machinery. Authorities stated that credits claimed by real estate companies would be deemed eligible once it is conclusively established that they meet the functionality and essentiality tests outlined by the Supreme Court. Many developers have already approached the court in response to these notices, claiming that tax officials are misusing the provision to block and deny ITC. Tax officials explained that they are carefully reviewing ITC claims to prevent potential misuse. Abhishek A. Rastogi, the founder of Rastogi Chambers, argued that a scientific and objective mechanism must be applied uniformly to determine eligibility, in order to avoid unjustly denying rightful credits. He also pointed out that in certain cases, authorities are interpreting the Supreme Court's findings as applying only to the petitioners in the Safari Retreats case. He stated that this interpretation is flawed, as judicial precedents are binding and should be applied uniformly to all taxpayers in similar situations across the industry.

Infrastructure Urban

02 Jun 2026

VECV Sales Rise 7.8 Per Cent In May 2026

VE Commercial Vehicles recorded sales of 7,978 units in May 2026, compared to 7,401 units in May 2025, registering growth of 7.8 per cent. This included 7,789 units from the Eicher brand and 189 units from the Volvo brand.Eicher branded trucks and buses reported sales of 7,789 units during the month, up 7.3 per cent from 7,258 units a year earlier. In the domestic commercial vehicle market, Eicher sales rose 9.1 per cent to 7,375 units from 6,758 units in May 2025.Exports declined 17.2 per cent to 414 units from 500 units in the corresponding month last year. Volvo Trucks and Volvo Buses recor..

Infrastructure Urban

02 Jun 2026

Table Space Strengthens DESYN Leadership Team

Table Space has announced strategic leadership appointments within DESYN, its integrated Design and Build business, as it looks to strengthen operations across key enterprise and GCC markets in India. DESYN was launched as a strategic extension of Table Space’s workspace solutions portfolio to meet rising demand for agile, high-quality and rapidly deployable enterprise workspaces.Shruti Ookabhoy has joined DESYN as Executive Director and will lead the Design vertical, focusing on design capability, operational excellence and team development across markets. She brings over 22 years of experi..

Infrastructure Transport

02 Jun 2026

Concord Associate Bags Rs 2.79 Bn Kavach Order

Concord Control Systems said its associate company, Progota India, has received a Rs 2.79 bn domestic order from Indian Railways for the supply, installation, testing and commissioning of on-board Kavach 4.0 loco equipment.The order is scheduled for execution within 12 months and strengthens Concord’s role in India’s railway safety and signalling ecosystem. Kavach is India’s indigenous automatic train protection system, designed to improve operational safety by helping prevent signal passing at danger and reducing collision risks.Gaurav Lath, Joint Managing Director, Concord Control Syst..