GST Not Payable On Renting Of A Residential Dwelling For Personal Use: Delhi High Court

The Delhi High Court has held that Goods and Service Tax is not payable on renting a residential dwelling for personal use.

The division bench of Justice Manmohan and Justice Manmeet Pritam Singh has observed that the rental 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 the 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.

The petitioner has challenged Clause (A)(b) of the Notification No.04/2022-Central Tax (Rate) dated 13th July 2022, as unsustainable being ultra vires Article 14 of the Constitution of India and also beyond the powers conferred under the GST Act, 2017.

The petitioner averred that by way of the 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. The amendment particularly affected those who are doing their business as a proprietary concern, like the petitioner. 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 admitted that the notification had failed to differentiate between the premises taken on rent for personal use and those taken on rent for business and that further steps would be taken to suitably modify the exemption notification. In the meantime, the department agreed that residential accommodation taken on rent for personal use would be treated as exempt.

The court held that the department is bound by the notification dated July 28th, 2017.

The court directed the department to levy and collect GST only in those cases where the residential accommodation is taken on rent by the registered person in the course or furtherance of its business.

Case Title: Seema Gupta Versus Union Of India

Citation: 2022 LiveLaw (Del) 921

Date: 27.09.2022

Counsel For Petitioner: Advocate Nidhi Gupta

Counsel For Respondent: Advocate Yash Aggarwal, Sumit K.Batra, Manish Khurana, Kshitij Chhabra, Akshay Amirtanshu, Ashutosh Jain, Pratik Samajpati

Click Here To Read Order