Case Law Details
Durga Dass Foundation Vs Estate Officer (Punjab & Haryana High Court)
Punjab & Haryana HC has considered the constitutional validity of GST levy on ground rent/rental/Lease payments based on the following two substantial questions:
(i) Whether the tax on lease of land would be covered by Entry 49 of List II of the Constitution of India ?
(ii) Whether a lease of land is a “Service” as contemplated by Article 246-A read with Article 366 (12A) and 26A of the Constitution of India ?
Brief Facts:
In the present case, petitioner being a Public Charitable Trust is running a school in the name of ‘Strawberry Fields High School’. Petitioner was allotted a land on leasehold basis in the year 2003 under “The Allotment of Land to Educational Institutions (Schools) etc. on leasehold basis in Chandigarh Scheme, 1996” for the construction of a school. Accordingly, petitioner was paying ground rent on the said allotted land and paid all the instalments timely. In the year 2021, the Estate Officer created a demand of Service Tax and GST on the said ground rent for the number of years. Feeling aggrieved by the action of the respondents recovering the amount of Service Tax/GST on ground rent, petitioner has challenged the vires of Para 2 of the Schedule II to the CGST Act, 2017 r.w.s 21 of the UTGST Act, 2017 being not in consonance with the Constitution of India.
Order:
A Bench headed by Hon’ble Justice Tejinder Singh Dhindsa heard the submissions of Advocate Sandeep Goyal, appearing on behalf of Petitioner who contended that the Article 246A of the Constitution of India allows GST to be levied on “services” and the definition of “service” in Article 366(26A) to mean “anything other than goods” is so vague. Therefore, the ordinary meaning of the word “service” does not include mere lease of land. Moreover, only the State Legislatures have the power to tax transactions relating to immovable property under Entry 49 List II Seventh Schedule and by deeming a lease of land to be a “supply of service” impose a tax on land itself.
The Hon’ble Division Bench on hearing the contentions of the petitioner issued Notice of Motion to the Respondents (Revenue Authorities) with respect to the relief as prayed for.
The next date of hearing is 02.11.2022.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB & HARYANA HIGH COURT
Heard.
Instant writ petition raises substantial questions to be gone into and inter alia to the following effect:-
(i) whether the tax on lease of land would be covered by Entry 49 of List II of the Constitution of India.
(ii) whether a lease of land is a “Service” as contemplated by Article 246-A read with Article 366 (12A) and 26A of the Constitution of India.
Notice of motion returnable for 02.11.2022.
Mr. Sumeet Jain, Addl. Standing Counsel, who is present in Court, enters appearance on behalf of respondents No.1 and 2 and waives service.
A complete copy of the writ paper-book already stands furnished to him.
