Delhi High Court Quashes Deficit Stamp Duty Demand on Residential Lease Deed

Court Orders Refund of Rs. 2,58,700 to Petitioner; GST Not to be Included in Lease Rent for Stamp Duty Calculation

In a significant ruling, the Delhi High Court has quashed an order demanding additional stamp duty on a residential lease deed involving Mr. Gurdev Raj Kumar. The court directed the refund of Rs. 2,58,700, which included the deficit stamp duty and penalty, within six weeks. The judgment, delivered by Justice Sachin Datta, emphasized that the Goods and Services Tax (GST) component cannot be included as part of the lease rent for calculating stamp duty on residential properties used for residential purposes.

The case revolved around a lease deed dated July 1, 2020, between Mr. Kumar and Optimum Therapeutics Private Limited for a property in Vasant Vihar, New Delhi. The lease was for residential purposes, and the petitioner argued that such leases are exempt from GST under Entry No. 12 of Notification No. 12/2017-Central Tax (Rate), issued by the Department of Revenue, Ministry of Finance.

Despite this exemption, the Collector of Stamps, GNCTD, demanded additional stamp duty, treating GST as part of the lease rent. Mr. Kumar challenged this order, asserting that the GST component should not form part of the lease rent for stamp duty purposes, as reiterated by several government circulars.

In its judgment, the court noted the clear exemption provided for residential leases from GST and concluded that the approach adopted by the respondent was misconceived. The court's decision is expected to set a precedent in similar cases, ensuring that residential lease deeds are not unduly burdened with additional stamp duties due to GST components.

Bottom Line:

Stamp Duty - GST component cannot be included as part of lease rent for calculating stamp duty on lease deeds of residential property used for residential purposes.

Statutory provision(s): Indian Stamp Act, 1899 Section 33, Notification No. 12/2017-Central Tax (Rate), Circular No. 3759/01/2015-2, Circular No. 44/18/2018-CGST.

Mr. Gurdev Raj Kumar v. Collector of Stamps (Government of NCT of Delhi), (Delhi) : Law Finder Doc Id # 2800062