Kavita Choudhary vs. Raipur Development Authority

Held

The Court held that the lease of commercial plots by the Raipur Development Authority to the petitioners constitutes a 'supply' of services under Section 7 of the CGST Act, 2017, read with Schedule II of the Act. The Court reasoned that the conjoint reading of Section 7 and Schedule II clearly indicates that the lease or letting out of a building, including a commercial complex, for business or commercial activity is a supply of service and is taxable under the GST Act. The Court also referred to the Bombay High Court's decision in the matter of Builders Association of Navi Mumbai, which was upheld by the Supreme Court, reinforcing the view that such demands for GST are in accordance with the law. Regarding the exemption, the Court found the petitioners' contention to be misconceived, as the relevant notifications and clarifications did not include commercial plots under the specified headings for exemption. Therefore, the demand notices issued to the petitioners were held to be in accordance with law and not suffering from any error. The writ petitions were dismissed.

Facts

The petitioners, including individuals and proprietorship firms, filed writ petitions challenging demand notices for Goods and Services Tax (GST) issued by the Raipur Development Authority (RDA). The RDA had leased plots to the petitioners for commercial purposes. The petitioners argued that the lease of plots did not constitute a 'supply' of services under the GST Act, or alternatively, that they were entitled to exemptions based on certain notifications. The petitions were filed before the High Court of Chhattisgarh at Bilaspur. The core of the dispute revolved around whether the lease of commercial plots by the RDA was a taxable supply of service under the GST regime.

Key Issues

1. Whether the lease of commercial plots by the Raipur Development Authority to the petitioners constitutes a 'supply' of services under Section 7 of the Central Goods and Services Tax Act, 2017 (CGST Act) and Schedule II of the Act, making it taxable under GST. - Petitioner's argument: The petitioners contended that the lease of plots, particularly commercial plots, did not fall under the definition of 'supply' as contemplated by the GST Act, or that it was not a supply of service. They also argued for exemption based on certain notifications. - Revenue/State's argument: The respondents, including the State and the Raipur Development Authority, argued that the lease of commercial plots for business purposes is a supply of service as defined under Section 7 and Schedule II of the CGST Act, and thus taxable. 2. Whether the petitioners are entitled to any exemption from GST on the lease of commercial plots based on the notifications issued by the Ministry of Finance, particularly Notification No. 11/2017 and the clarification dated 30.04.2019. - Petitioner's argument: The petitioners claimed that certain notifications and clarifications provided exemptions for industrial plots or plots for infrastructure development, and argued for their applicability to commercial plots. - Revenue/State's argument: The respondents contended that the notifications and clarifications specifically excluded commercial plots from any exemption, and therefore, the petitioners were not entitled to claim such benefits.