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.

Real Estate

14 Oct 2025

CRISIL Leases Rs 6 billion Office Space in Mumbai’s Powai

CRISIL, a leading global analytics and rating agency, has signed a long-term lease worth nearly Rs 6 billion for about 250,000 sq ft of office space in Mumbai’s Powai. The lease, among the largest in the city’s commercial property segment, spans approximately 15 years.The company will occupy a new building at Hiranandani Business Park in Powai, one of Mumbai’s most premium business districts known for its modern infrastructure and connectivity. The lease, structured on a long-term model, underscores the growing demand for high-quality, large-scale office spaces from financial and knowled..

Real Estate

14 Oct 2025

Kolte-Patil Acquires 7.5-Acre Pune Land with Rs 14 bn GDV

Kolte-Patil Developers has acquired a 7.5-acre land parcel in Pune’s western micro-market, with a projected gross development value (GDV) of around Rs 14 billion. The project will be developed as a premium residential community catering to mid and upper-income homebuyers. Located along the Baner-Balewadi corridor, the land is strategically positioned near Pune’s IT and commercial hubs. The acquisition is expected to strengthen the company’s presence in the city’s high-demand residential zones.According to the developer, the project will feature contemporary amenities and sustainab..

Infrastructure Energy

14 Oct 2025

Norwegian Fund Invests $20 Million in IPO-Bound SAEL

SAEL, backed by global investors including TPG Rise and Norfund, operates over 20 renewable projects across India, with a total capacity exceeding 600 MW. The company has been expanding aggressively in the waste-to-energy and solar segments as part of India’s broader clean energy transition.The funds raised through this investment will help SAEL accelerate project implementation, enhance operational efficiency, and reduce carbon emissions. The partnership also reinforces Norway’s growing interest in India’s renewable energy market, which continues to attract significant foreign capi..