Exempt GST on residential lease cannot be added to rent for stamp duty computation; demand and penalty quashed.

For a residential lease used as a residence, exempt GST could not be added to the lease rent for computing stamp duty. The Delhi HC held that renting of a residential dwelling for residential use fell within the GST exemption for such supply, so the demand treated GST as part of the lease consideration on a misconceived basis. On that footing, the order demanding deficit stamp duty and penalty was unsustainable and was quashed. The petitioner was also entitled to refund of the amount deposited.

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Issues: Whether GST on rent payable under a lease of residential premises used as a residence could be added to the lease amount for the purpose of computing stamp duty, and whether the order demanding deficit stamp duty and penalty was liable to be quashed.

Analysis: The residential lease was covered by Entry No. 12 of Notification No. 12/2017-Central Tax (Rate), which exempts renting of a residential dwelling for use as a residence from GST. The impugned demand proceeded on the premise that GST formed part of the lease consideration for stamp duty purposes. The Court held that this approach was misconceived. On the materials relied upon, the levy of stamp duty could not be enlarged by treating exempt GST as part of the rent for a residential lease used as a dwelling.

Conclusion: The demand for deficit stamp duty and penalty was unsustainable. The impugned order was quashed and the petitioner was entitled to refund of the amount deposited.

Ratio Decidendi: For a residential lease used as a residence, exempt GST cannot be added to the lease rent for stamp duty computation.

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