Rajendra Kumar Wadhwani vs. State Of Chhattisgarh

Facts

The petitioners, including Shobha Choudhary, Star Boutique, Amit Kukreja, Rajesh Kumar Hablani, Hari Om Plastic, Suraj Jaswani, and Sunny Gurnani, are challenging demand notices issued by the Raipur Development Authority (RDA) for Goods and Services Tax (GST) on lease agreements for commercial plots. The RDA had leased these plots to the petitioners. The petitioners argued that the lease of commercial plots does not attract GST. The petitions were filed before the High Court of Chhattisgarh, Bilaspur, challenging the GST demands made by the RDA, which is a State authority. The tax periods are not explicitly stated but relate to the period when the lease agreements were in effect and GST became applicable.

Held

The Court held that the lease of commercial plots by the Raipur Development Authority to the petitioners constitutes a 'supply' of service taxable under the Goods and Services Tax (GST) Act, 2017. The Court reasoned that Section 7 of the Act, read with Schedule II, clearly defines lease or letting out of a building, including commercial complexes, for business or commercial activity as a supply of service. The Court referred to the Bombay High Court's decision in the Builders Association of Navi Mumbai case, which held similar demands for GST on renting of immovable property to be in accordance with law and was upheld by the Supreme Court. The Court found the petitioners' contention regarding exemption for commercial plots to be misconceived, as the relevant notifications and clarifications only extended exemptions to industrial plots or plots for infrastructure development, not commercial plots. Therefore, the demand notices issued to the petitioners were held to be in accordance with law and not suffering from any error. The Court dismissed the writ petitions.

Key Issues

1. Whether the lease of commercial plots by the Raipur Development Authority to the petitioners constitutes a 'supply' of service taxable under the Goods and Services Tax (GST) Act, 2017, and if so, whether the demand notices issued are valid. (Section 7, Schedule II of the CGST Act, 2017). Petitioner's arguments: The petitioners contended that the lease of commercial plots does not fall under the taxable services as defined under the GST Act and relevant notifications. They argued that the demand for GST is contrary to law, unfair, unjust, and unreasonable. They also sought to rely on certain clarifications regarding exemptions for industrial plots or plots for infrastructure development. Revenue/State's arguments: The respondents, including the Raipur Development Authority and the State of Chhattisgarh, argued that the lease of commercial plots is a supply of service taxable under the GST Act. They relied on the provisions of the Act and judicial precedents, including the Bombay High Court's decision in the Builders Association of Navi Mumbai case, which was upheld by the Supreme Court.