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of <h1>Court Rules: Payments to Court Receiver for damages not liable to GST. Liability discharged by Receiver's agent.</h1> <h3>Bai Mamubai Trust Versus Suchitra</h3> Bai Mamubai Trust Versus Suchitra - 2019 (31) G.S.T.L. 193 (Bom.) , [2020] 73 G S.T.R. 46W (Bom) Issues Involved1. Applicability of GST on services rendered by the Court Receiver appointed under Order XL of the CPC.2. GST liability on royalty or other payments made to the Court Receiver in respect of properties under receivership.3. Determination of 'supply' within the meaning of the CGST Act in the context of illegal occupation of suit premises.4. Mode of discharge of GST liability, if applicable, on payments made to the Court Receiver.Detailed AnalysisIssue 1: Applicability of GST on Services Rendered by the Court ReceiverThe Court concluded that services provided by the Court Receiver fall under 'Services by any court or Tribunal established under any law for the time being in force' as per Paragraph 2 of Schedule III to the CGST Act. Therefore, these services are not treated as a supply of goods or services and are exempt from GST. The Court Receiver, being an establishment of the High Court and a permanent department, implements orders of the Court and functions under its supervision and direction. Consequently, GST should not be levied on amounts directed to be paid by litigants to the office of the Court Receiver.Issue 2: GST Liability on Royalty or Other Payments Made to the Court ReceiverThe Court examined whether payments made to the Receiver in relation to the underlying dispute attract GST. Section 92 of the CGST Act provides that GST may be determined and levied from the receiver if the receiver is in control of the business of a taxable person and a taxable event of supply has taken place. The Court emphasized that the requirement of a 'supply' is essential for GST liability. Payments made as royalty towards damages or compensation for illegal occupation do not constitute a 'supply' and hence are not liable to GST.Issue 3: Determination of 'Supply' in the Context of Illegal OccupationThe Court found that in the present case, where the Plaintiff alleges that the Defendant is in illegal occupation of the Suit Premises, the payment of royalty does not constitute a 'supply' within the meaning of the CGST Act. The royalty is paid as compensation for unauthorized occupation and lacks the necessary quality of reciprocity to make it a 'supply'. Therefore, no GST is payable on such payments.Issue 4: Mode of Discharge of GST LiabilityIf GST is applicable, the liability can be discharged by the agent of the Court Receiver acting on behalf of the Receiver under Section 2(105) of the CGST Act. The Court suggested including a clause in the standard form of the agency agreement to ensure that the agent appointed by the Court Receiver must have or obtain CGST registration and make such payment on behalf of the Receiver. This approach would obviate the need for the Receiver to obtain separate GST registration for each matter.ConclusionIn the present case, no GST is payable on the royalty amount paid by the Defendant to the Court Receiver as a condition for remaining in possession of the Suit Premises. The modification made to the Order dated 12th/20th July 2017, adding 'along with GST at the applicable rate,' was reversed. The Defendant shall pay monthly royalty to the Court Receiver without GST. Any GST deposited but not paid to the authority shall be adjusted against future royalty payments.
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