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The GST Act was implemented in 2017, providing all the cases wherein the GST shall be applicable. However, even after providing such clarification, there are certain cases wherein the applicability of GST is not clear yet, such as in the case of renting residential accommodation for personal use.
The applicability of GST on the Renting of Residential Dwelling by a Registered Proprietor in his personal capacity with special reference to the case of Seema Gupta Vs Union of India is discussed in this article to provide insights about the judgement pronounced on 27. 09.22. by the High Court of Delhi.
Table of Contents
The writ petition was filed against section Clause (A)(b) of Notification No 04/2022-Central Tax (Rate) dated 13.07.22 and the same is ultra vires to Article 14 of the Constitution of India along with being beyond the powers under the GST Act 2017.
The main issue raised in this case was whether renting of residential dwelling by a registered proprietor in a personal capacity is exempted under GST.
It was stated that through the impugned notification, the exemption granted by the previous notification No 12/2017-Central Tax (Rate) dated 28.07,22 in respect of renting accommodation isn’t available to tenants registered under GST any longer, and the said amendment is affecting the proprietors engaged in the business of proprietary concerns as the petitioner in the present case and the denial of the exemption solely on the basis of the person being registered under GST cannot be understood as the same does not have any rational relation to the object which is sought to be achieved.
Respondents no.1, 3 4,5 of the case filed an affidavit on 30th August 2022 stating the following-
The following submissions were made for the consideration of the Hon’ble Court.
The Hon’ble Court accepted the clarification that renting a residential dwelling for a proprietor of a proprietary firm for his personal use as a residence and not for the purpose of the business of his proprietary firm shall be exempted from GST, and the same shall be binding on all the respondents of the case.
The judgement pronounced in the discussed case regarding renting of residential dwelling for personal use is expected to provide much-needed clarification to the proprietors registered under GST as well as the partners of a partnership firm who rent an immovable property for their personal use.
Read Our Article: Applicability of GST on Immovable Property including TDR
Shubhangi has completed her B. A.LLB (H) with specialization in Business Laws from Amity University. She is particularly interested in legal research and writing and wishes to utilize her knowledge to create informative legal content. She has prior experience in corporate and criminal litigation and has great drafting skills. She has also published various research papers in reputed journals.
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