Delhi High Court Quashes Stamp Duty Demand on Residential Lease; Orders Refund to Petitioner:

Delhi High Court Quashes Stamp Duty Demand on Residential Lease; Orders Refund to Petitioner The petitioner had executed a lease deed dated 01.07.2020 with Optimum Therapeutics Pvt. Ltd. for a residential property at Vasant Vihar, New Delhi. The lease deed expressly stated that the premises would be used solely for residential purposes. When the document was presented for registration, the Sub-Registrar impounded it under Section 33 of the Indian Stamp Act, 1899, alleging a deficiency in stamp duty on the premise that GST ought to be included in the rent for computing stamp duty. The matter was thereafter referred to the Collector of Stamps, who issued a show-cause notice and eventually directed the petitioner to pay differential stamp duty of Rs. 51,740 along with a penalty of Rs. 2,06,960. The Collector rejected the petitioner’s representations and insisted on payment of the impugned stamp duty and penalty, which the petitioner paid under protest to enable registration.' Main Issue: Whether GST can be treated as part of the lease rent for purposes of stamp duty calculation, especially when residential leasing for residential use is itself exempt from GST. HC's Decision: The Hon'ble High Court found the petitioner’s stance fully supported by statutory notifications and official circulars. Entry 12 of Notification No. 12/2017-Central Tax (Rate) clearly exempts renting of residential dwellings for use as residence from GST. Thus, the very foundation of the Collector’s assumption was legally untenable. The Court further observed that even in cases where GST is payable, authoritative clarifications from the Tax Research Unit and the Inspector General of Registration (Tamil Nadu) confirm that GST is not to be included in the rent for determining stamp duty, as GST is not a levy on the property itself but on the supply of service. The Court quashed the Collector’s order dated 19.10.2020. The respondent was directed to refund the entire amount of Rs. 2,58,700 deposited by the petitioner within six weeks. Thus, the writ petition was disposed of. To Read Full Judgment, Download PDF Given Below