Bombay HC Petition Challenges Constitutional Validity of GST on Lease/Rent Payments; No Stay on Recovery, Says SC Bench
The Constitutional validity of Para 2 and Para 5(a) of the Schedule II to the Central Goods and Services Tax Act, 2017 and the Goa Goods and Services Tax Act, 2017 for lease/rent payments have been challenged in a Writ Petition by Myrayash Hotels Pvt. Ltd. before the Bombay High Court. The petitioner argued that GST can only be levied on "goods and services" under Article 246A of the Constitution of India, and since there is no "service" provided by the landlord to the tenant in a lease/rent agreement, GST cannot be levied on the same. However, the Supreme Court bench of Justice M.R. Shah and Justice Sanjay Karol clarified that there is no stay on the recovery of GST and the Revenue can recover the tax in accordance with the law. The bench referred the matter to a Constitution Bench of 9 judges for further review.
Petitioner Challenges Constitutional Validity of GST on Lease/Rent Payments, Submits Unconstitutionality of Levy
The petitioner, Myrayash Hotels Pvt. Ltd., argued before the Supreme Court that the imposition of GST on lease/rent payments is unconstitutional since there is no service element involved in such transactions. According to the petitioner, all rights and enjoyment over the immovable property are transferred to the lessee/tenant during the lease/rent period, denouncing the lessor/landlord's ownership. The Bombay High Court, in its ruling, held that as long as the tax does not fall within List II of the Seventh Schedule, Parliament has wide powers under the residuary power of legislation to assume a service element in the lease of land. The petitioner filed an SLP before the Supreme Court challenging the High Court's order and the constitutional validity of GST on lease/rent payments. Senior Advocate Kavin Gulati, representing the petitioner, contended that such a levy of GST is completely unconstitutional, and the petitioner should not be made liable to pay GST on lease rentals, premiums, or payments related to the lease.
Supreme Court Admits Petitioner's Appeal on GST on Lease/Rent Payments, Refers to Constitution Bench and Tags with Civil Appeal No. 4487 of 2010
The Supreme Court of India has granted leave to the petitioner, Myrayash Hotels Pvt. Ltd., to appeal against the levy of GST on lease/rent payments and directed the appeal to be listed before a Constitution Bench of 9 judges. The matter has been tagged/connected with Civil Appeal No. 4487 of 2010. The Court has decided to admit the appeal, indicating that it finds the issue raised to be of constitutional significance. The Constitution Bench will review the Constitutional validity of Para 2 and Para 5(a) of the Schedule II to the Central Goods and Services Tax Act, 2017, and the Goa Goods and Services Tax Act, 2017, with respect to lease/rent payments.
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TAGS: Constitutional validity GST lease payments rent payments Supreme Court Constitution Bench 9 judges Myrayash Hotels Pvt. Ltd. Writ Petition Bombay High Court Para 2 Para 5(a) Schedule II Central Goods and Services Tax Act 2017 Goa Goods and Services Tax Act 2017 Article 246A Constitution of India service lessor landlord lessee tenant immovable property Entry 49 List II Seventh Schedule residuary power of legislation senior advocate Kavin Gulati SLP leave to appeal Civil Appeal No. 4487 of 2010 constitutional significance review.
