The respondents, including M/s Safari Retreats Pvt. Ltd., were engaged in constructing commercial malls and intended to let out the premises on rent. They sought to utilise accumulated Input Tax Credit (ITC) on goods and services used for such construction against their GST liability on rental income. However, the tax authorities denied the claim by invoking Section 17(5)(d) of the CGST Act, 2017, which blocks ITC on goods and services used for the “construction of immovable property” on one’s own account.The Orissa High Court, in Safari Retreats Pvt. Ltd. v. Chief Commissioner of CGST (2019), read down Section 17(5)(d), holding that denial of ITC where GST was payable on rental income would defeat the purpose of the GST regime. The Union of India challenged this decision, arguing that the provision was constitutionally valid and based on intelligible classification between immovable and movable property.The Supreme Court upheld the validity of Section 17(5)(c) and (d) of the CGST Act, 2017. It ruled that ITC is a statutory, not a constitutional, right and may be restricted by legislative policy. The Court found that the differentiation between assessees constructing immovable property for sale and those constructing it for letting out has a rational nexus with the legislative objective of preventing revenue leakage.It held that the expression “plant or machinery” in Section 17(5)(d) must be read in conjunction with the definition of “plant and machinery” in the Explanation to Section 17, and both refer to movable assets. Thus, immovable structures such as shopping malls and buildings do not qualify as “plant.”The Court further ruled that the denial of ITC on construction of immovable property, even if intended for renting, is consistent with the scheme of GST. It overruled the Orissa High Court’s judgment and held that clauses (c) and (d) of Section 17(5) are constitutionally valid and do not violate Articles 14, 19(1)(g), or 300A of the Constitution.

The appeal arose from an interim order passed by the Gujarat High Court in a writ petition filed by the respondent seeking protection from arrest under Sections 69 and 132 of the Central Goods and Services Tax Act, 2017. In its interim order dated 24 December 2019, the High Court criticized the conduct of the officers during a search operation and observed that statutory protection under Section 157 of the GST Act—relating to “good faith” actions—may not be available to them. The Union of India and State authorities challenged this observation before the Supreme Court, seeking to expunge the remarks as being premature and prejudicial to the officers.The Supreme Court accepted the State’s request and expunged paragraph 28 of the High Court’s order. It held that the observations denying statutory protection under Section 157 were premature, as no proceedings had been initiated against the officers. The Court explained that the “good faith” clause operates as a defense available to a statutory functionary when prosecution or legal proceedings are actually initiated, and its applicability must be adjudicated within such proceedings.The Court clarified that under Section 3(22) of the General Clauses Act, 1897, an act done honestly, even if negligently, qualifies as being in good faith. It further observed that the High Court’s opinion, suggesting that the officers “may not” be entitled to such protection, amounted to an advance ruling that could compromise future adjudication.Accordingly, the Supreme Court expunged the impugned observations and disposed of the appeal, leaving the pending writ petition before the High Court to proceed on its merits without influence from the expunged remarks.

The appeals were filed by the service tax authorities against orders of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had held that the “User Development Fee” (UDF) collected by airport operators such as Delhi International Airport Ltd., Mumbai International Airport Pvt. Ltd., and Hyderabad International Airport Pvt. Ltd. was not liable to service tax under the Finance Act, 1994.The assessees had entered into Operation, Management, and Development Agreements (OMDA) with the Airports Authority of India (AAI) under the Airports Authority of India Act, 1994, authorizing them to collect a “development fee” from passengers under Section 22A of the Act, with prior government approval. The Commissioner of Service Tax issued show cause notices demanding service tax on these collections, which were later confirmed. On appeal, CESTAT set aside the demand, holding that UDF was not a taxable service.The Revenue argued before the Supreme Court that the UDF was a consideration for services provided at airports—such as maintenance, upgradation, and expansion of facilities—and therefore liable to service tax under Section 65(105)(zzm) as “airport services.”The Supreme Court dismissed the Revenue’s appeals and upheld the CESTAT orders. The Court held that the development fee collected under Section 22A of the AAI Act, 1994 is a statutory levy in the nature of a cess or tax and not a fee for services rendered. It was collected for financing the upgradation, expansion, or development of airports and not in exchange for any service to passengers.The Court observed that the levy was authorized by law, deposited in escrow accounts, and regulated by statutory rules. Since there was no contractual relationship or quid pro quo between the passengers paying the fee and the airport operators, the collections could not be treated as consideration for any service. Therefore, no service tax was chargeable on such collections under the Finance Act, 1994.Accordingly, the Supreme Court upheld that User Development Fee (UDF) or Development Fee (DF) levied under Section 22A of the AAI Act is outside the ambit of “taxable services.

The appellants, Hero Motocorp Ltd. and Sun Pharma Laboratories Ltd., had set up industrial units in Uttarakhand and Himachal Pradesh under the Office Memorandum (O.M.) dated 7 January 2003, which granted 100% excise duty exemption for ten years to new and substantially expanded industrial units in specified regions. These benefits were notified under Notification No. 50/2003-CE dated 10 June 2003. Following the introduction of the Goods and Services Tax (GST) regime through the Constitution (101st Amendment) Act, 2016 and enactment of the Central Goods and Services Tax Act, 2017 (CGST Act), the previous area-based exemptions were rescinded by Notification No. 21/2017-CE dated 18 July 2017. The Government introduced a Budgetary Support Scheme granting partial reimbursement (58% of CGST and 29% of IGST) to industrial units. The appellants challenged the reduction of benefits before the Delhi and Sikkim High Courts, contending that the Government was bound by the 2003 representation promising 100% exemption. Both High Courts dismissed the petitions.The Supreme Court dismissed the appeals and upheld the High Courts’ decisions. It held that the withdrawal of excise exemptions and introduction of partial reimbursement under the GST regime were valid and in accordance with the proviso to Section 174(2)(c) of the CGST Act, 2017, which specifically provides that any tax exemption granted as an investment incentive shall not continue if rescinded after the appointed day. The Court ruled that the doctrine of promissory estoppel cannot override statutory provisions or apply against legislative action. The change from the excise to GST regime constituted a major constitutional and statutory shift, and the earlier industrial incentives could not be enforced under the new law.The Court further held that no writ of mandamus could lie against the Union of India to compel payment of full refund since no statutory duty existed to grant 100% reimbursement. The Budgetary Support Scheme was a policy decision implemented in accordance with the recommendations of the GST Council and the Finance Commission.Accordingly, the Court upheld the validity of the 58% budgetary support and rejected the claim for continuation of full exemption under the earlier scheme.

Multiple writ petitions were filed by associations and individuals representing Haj Group Organizers (HGOs) and Private Tour Operators (PTOs) challenging the levy of service tax and Goods and Services Tax (GST) on services provided to Haj pilgrims. The petitioners contended that their services — involving travel, accommodation, food, and logistics — formed part of the conduct of a religious ceremony (Haj/Umrah) and were thus exempt under paragraph 5(b) of the Mega Exemption Notification No. 25/2012–ST and corresponding GST exemption notifications. They further argued that while Haj Committees were granted tax exemption under paragraph 5A as “specified organisations,” denial of a similar exemption to HGOs/PTOs violated Article 14 of the Constitution.The Union of India contended that HGOs/PTOs merely arranged logistics and did not conduct any religious ceremony; hence, their services were taxable. It was also submitted that the classification distinguishing Haj Committees from HGOs was reasonable since the former are statutory bodies functioning under the Haj Committee Act, 2002, while the latter are private profit-oriented entities.The Supreme Court dismissed the petitions, upholding the tax liability of HGOs and PTOs. The Court held that under the Finance Act, 1994 and the Integrated GST Act, 2017, the place of provision of services was the location of the recipient—Indian residents—making the services taxable within India. The Court found that paragraph 5(b) of the Mega Exemption Notification applied only to persons who conduct religious ceremonies, not to those merely facilitating travel and accommodation. Clause 5A applied exclusively to “specified organisations” such as the Haj Committee, not to private operators.On the issue of Article 14, the Court held that the classification between the Haj Committee and HGOs was valid, as the former is a statutory body under government control performing welfare functions, while HGOs are commercial entities. The plea based on Article 25 was also rejected. Consequently, all writ petitions were dismissed, and the levy of service tax/GST on HGOs/PTOs was upheld.