Government Mulls Review Petition Against Supreme Court Verdict on ITC for Commercial Real Estate

By: Admin
October 08, 2024
Categories: GST Recent News
4 Min Read

The government is contemplating filing a review petition against the Supreme Court’s ruling in the Safari Retreats case, which allows commercial real estate companies to claim Input Tax Credit (ITC) on construction costs for rental buildings. This decision could potentially lead to a revenue shortfall of nearly ₹5,000 crore, according to sources familiar with the matter.

In light of this verdict, several companies have begun approaching adjudicating authorities to confirm their eligibility for ITC. “The law committee is currently evaluating whether the government should challenge the Supreme Court’s order,” a senior government official stated.

Legal representatives of petitioners have also hinted at seeking a review of specific aspects of the judgment. “We may file a review petition for reconsideration on certain limited points,” a tax advocate who represented several petitioners said.

Many companies that had availed ITC but did not utilize it due to ongoing disputes are now awaiting a final approach from adjudicating authorities. This decision establishes critical legal principles regarding input GST credit restrictions under Section 17(5)(d), with potential implications beyond the real estate sector, impacting businesses like port operators, airports, and manufacturing entities with large capital expenditures.

The Supreme Court’s decision challenges existing GST restrictions, potentially leading to an influx of ITC claims, which could significantly reduce government tax revenues and prompt a reassessment of GST policies to protect revenue interests.

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