Renting or Leasing of Residential Dwelling for Use as Residence is Exempt from GST: Delhi HC Quashes Stamp Duty Demand [Read Order]
The Court observed that including GST in the lease rent for stamp duty computation was erroneous and directed a refund of ₹2,58,700, comprising the alleged deficit stamp duty and penalty, to the petitioner within six weeks
Delhi High Court, Stamp Duty, Delhi HC
Delhi High Court, Stamp Duty, Delhi HC
The High Court of Delhi, quashed the stamp duty demand raised by the Collector of Stamps, GNCTD, holding that renting or leasing of a residential dwelling for use as a residence is exempt from Goods and Service Tax ( GST ) under Entry No. 12 of Notification No. 12/2017-Central Tax (Rate).
Gurdev Raj Kumar,petitioner-assessee, filed a petition challenging the order dated 19.10.2020 issued by the Collector of Stamps, GNCTD, which directed him to pay a deficient stamp duty of ₹51,740 along with a penalty of ₹2,06,960. He also sought a refund of the additional stamp duty of ₹2,58,700.
The petitioner had executed a lease deed dated 01.07.2020 with Optimum Therapeutics Private Limited for property No. F-63, Poorvi Marg, Vasant Vihar, New Delhi, which was expressly meant for residential use. When the lease deed was presented for registration, the Sub-Registrar VII-A impounded it under Section 33 of the Indian Stamp Act, 1899, citing deficient stamp duty on the ground that GST should be included in the computation.
The matter was referred to the Collector of Stamps, who issued a show cause notice on 20.07.2020. In reply, the petitioner contended that residential leases used for residential purposes were exempt from GST under Entry No. 12 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, and even if GST was applicable, it could not be considered part of the lease rent for stamp duty purposes as clarified by Circular No. 3759/01/2015-2 dated 24.05.2019 issued by the Inspector General of Registration, Chennai.
Despite these submissions, the Collector rejected the petitioner’s contentions and directed payment of the alleged deficit stamp duty and penalty amounting to ₹2,58,700.
The petitioner counsel stated that the petitioner had deposited the disputed amount only to complete the registration, which took place on 19.11.2020.
He referred to Entry No. 12 of Notification No. 12/2017-Central Tax (Rate), which exempted renting of residential property for residential use from GST. He also cited Circular No. 44/18/2018-CGST dated 02.05.2018, which clarified that while transfer of tenancy rights was taxable, renting of residential dwellings for residence was exempt.
Further, he relied on Circular No. 3759/01/2015-2 dated 24.05.2019 issued by the Inspector General of Registration, Chennai, which clarified that GST payable by the lessee could not be treated as part of rent for stamp duty calculation.
Based on these provisions, the counsel argued that the inclusion of GST in the lease rent for stamp duty purposes was incorrect and the petitioner was not liable to pay any additional stamp duty or penalty.
Justice Sachin Datta found substance in the petitioner’s arguments after examining the relevant notifications and circulars. It held that Entry No. 12 of Notification No. 12/2017-Central Tax (Rate) clearly exempted renting or leasing of a residential dwelling for use as a residence from GST. Hence, the Collector’s view treating the lease as liable for additional stamp duty was found to be erroneous.
Accordingly, the Court quashed the impugned order dated 19.10.2020 and directed the respondent to refund ₹2,58,700, comprising the alleged deficit stamp duty and penalty, within six weeks. The petition was thus disposed of.
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