S.Ratnadevi vs. M.Hariharan

Facts

This matter involves an interlocutory application (CMP(MD) No.1564 of 2019) filed in an appeal (AS(MD) No.179 of 2018) before the Madurai Bench of the Madras High Court. The appeal itself is against a judgment and decree dated August 31, 2018, from the Second Additional District and Sessions Judge, Thanjavur, in O.S. No.13 of 2008. The interlocutory application seeks the appointment of a third-party Receiver for certain properties pending the disposal of the appeal. During the proceedings, it was brought to the Court's attention that Goods and Services Tax (GST) is payable on rents received from tenants occupying these properties. The Receiver had not collected rent prior to February 2021, and tenants claimed to have paid rent and GST to the first respondent.

Held

The Court acknowledged that GST is payable on rents received from tenants. It was brought to the Court's notice that tenants claimed to have paid rent and GST to the first respondent. The Receiver had not collected rent from the tenants prior to February 2021. The Court held that for any rents received by the Receiver from the tenants after February 2021, the Receiver would be responsible for the liability towards GST or property tax. Furthermore, the Court clarified that the first respondent shall bear the expenses or liabilities towards GST or property tax for the period up to February 2021. The learned counsel for the first respondent gave an undertaking to cooperate with the Receiver and share all information. The matter was posted for further hearing.

Key Issues

1. Who is responsible for the Goods and Services Tax (GST) liability on rents collected from the properties in question, and for which period? The petitioner sought the appointment of a third-party Receiver for properties pending appeal. The Court was informed that GST is payable on rents. The Receiver stated that tenants claimed to have paid rent and GST to the first respondent and were therefore not liable to pay GST to the Receiver. The Receiver had not collected rent prior to February 2021. The petitioner's argument, implicitly, is that the Receiver should manage the properties and ensure all statutory dues, including GST, are paid. The respondents, through the Receiver, highlighted the tenants' contention regarding GST payment to the first respondent and the Receiver's non-collection of rent prior to February 2021, suggesting a dispute over the current liability.