No GST on Renting of Residential Building by Proprietor of a registered proprietorship firm: Delhi HC [Read Order]

GST - Residential Building - Delhi HC - taxscan

A division bench of the Delhi High Court has held that GST is not leviable on the portion of rent received by a  Proprietor of a registered proprietorship firm when such renting is sone in his /her own personal capacity for use as his/her own residence as well as not for use in the course or furtherance of business of his/her proprietorship firm.

The petitioner, Ms. Seeme Gupta contended that by way of the impugned notification dated 13th July, 2022, the exemption granted by a previous Notification dated 28th July, 2017 for renting of residential accommodation is no longer available to tenants who are registered under GST. It is further averred that this amendment is particularly affecting those who are doing their business as a proprietary concern, like the Petitioner. It is also averred that denial of exemption solely on the basis that the tenant is registered under GST is not based upon any intelligible differentia and the said differentia has no rational relation to the object sought to be achieved.

The department relied on the CBIC clarification as per which renting of a residential dwelling to a proprietor of a registered proprietorship firm who rents it in his personal capacity for use as his own residence and not for use in the course or furtherance of business of his proprietorship firm and such renting is on his own account and not that of the proprietorship firm, shall be exempt from tax under Notification No.04/2022-Central Tax (Rate) dated 13.07.2022.

Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “Consequently, the aforesaid clarification that renting of a residential dwelling by a proprietor of a registered proprietorship firm, who rents it in his/her own personal capacity for use as his/her own residence as well as not for use in the course or furtherance of business of his/her proprietorship firm and such renting is on his/her own account and not that of proprietorship firm shall be exempt from GST, is accepted by this Court and all the respondents are held bound by the same.”

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