{"id":17268,"date":"2020-10-03T14:13:40","date_gmt":"2020-10-03T08:43:40","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=17268"},"modified":"2020-10-03T16:24:45","modified_gmt":"2020-10-03T10:54:45","slug":"gst-cant-be-imposed-on-services-provided-by-court-receiver","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/gst-cant-be-imposed-on-services-provided-by-court-receiver\/","title":{"rendered":"GST Can\u2019t be Imposed on Services Provided By Court Receiver"},"content":{"rendered":"\n

The Hon’ble Bombay High Court in the\nmatter of Bai Mamubai Trust v. Suchitra<\/strong> [Decided on\nSeptember 13, 2019<\/strong>] held the office of the Court Receiver is an\nestablishment of the High Court through which the orders are being issued by\nthe Court. Therefore, the services of the Court Receiver considered as services\nprovided by any higher or lower Court. Accordingly, the fees or charges paid by\nthe Court Receiver are not liable to GST as per Para 2 of the Schedule III of\nthe Central Goods and Services Tax Act, 2017 (“CGST Act”<\/strong>).<\/p>\n\n\n\n

Bai Mamubai Trust v.\nSuchitra : Facts of the Case<\/h2>\n\n\n\n

There was a dispute between the landlord & the tenant. A Court Receiver was appointed by High Court for the maintenance of the property and to collect the rent from Defendant. The Court Receiver collected the consideration amount in the form of fees and also received ad-hoc royalty amount from the Defendant for occupying the disputed premises. <\/p>\n\n\n\n

Issues Raised <\/h3>\n\n\n\n
\"Issues<\/figure><\/div>\n\n\n\n

Read our article<\/b>:Coupons and Vouchers under GST<\/a><\/mark><\/p>\n\n\n\n

Judgement<\/h2>\n\n\n\n

The\nHon’ble HC, Bombay, held as under:<\/em><\/strong><\/p>\n\n\n\n

Illustration of\nIssue 1<\/h3>\n\n\n\n

It is clarified that the Court has not\nconsidered this issue in the context of a remote receiver who may be appointed\nby the Court under Order XL of the CPC, GST cannot be levied or received on the\nservices rendered by Court Receiver. Under Rule 591 of Bombay High Court (Original\nSide) Rules describes the fees of Court Receiver. Therefore, GST should not be\nlevied on the amounts directed to be paid by litigants to the office of the\nCourt Receiver. <\/p>\n\n\n\n

Since the office of Court Receiver is an establishment of the High Court<\/strong><\/em>[1]<\/strong><\/em><\/a><\/sup> and a permanent department of the High Court, it is an adjunct of the Court through which the orders of protection issued by the Court. Since in GST, ‘services by any court or Tribunal established under any law for the time being in force’ are to be treated neither as a supply of goods nor a supply of services [Sch. III, item 2], the High Court ruled that the Court Receiver will not be liable to pay any Goods and services tax<\/strong><\/a> on such fees.<\/p>\n\n\n\n

Illustration of Issue 2<\/h3>\n\n\n\n

Defendant has the permission to remain\nin possession of the premises as an agent of the Court Receiver under the\nagency agreement to be executed with the Court Receiver, on payment of monthly\nad-hoc royalty of Rs. 45,000\/.<\/p>\n\n\n\n

The prima facie finding was that\nDefendant has no right to be in the occupation of Suit Premises. The permission\naccessed to the Defendant to remain in possession subject to the payment of\nroyalty in order to balance the equity of the case. The ground for this payment\nis alleged to have illegal occupation or trespass by the Defendant. Such\npayment lacks the necessary quality of reciprocality to make it a ‘supply’. <\/p>\n\n\n\n

The quantification of royalty towards a\nclaim for damages involves ascertaining the market rent payable concerning the\nproperty was alleged to be occupied illegally, the compensation liable to be\npaid does not acquire the character of consideration to make the transaction a\nsupply.<\/p>\n\n\n\n

Analysis<\/h2>\n\n\n\n

In Bai Mamubai\nTrust case, the Defendant was allowed to occupy the premises, and in return, he\nwas expected to pay a royalty to the Court Receiver so, in a way, this could\nhave perhaps been considered as a bilateral act or even a reciprocal\nobligation. Secondly, assuming that if the Defendant were not able to pay or\nwas not agreeable to the amount of royalty fixed, then obviously, he would not\nhave been allowed to occupy the premises. It may also suggest that even in such\ncases, there is a reciprocal obligation and could amount to supply of services.<\/p>\n\n\n\n

The situation\ncould become complicated, if the Defendant is decided, after a few years, to be\na lawful tenant, ab initio. In this scenario, the amount of royalty received\nover these years could acquire the colour of rent, making the landlord liable\nto pay GST for renting of immovable property, for all these years.<\/p>\n\n\n\n

With due respect, it is felt that this judgment could have broader implications and could be argued to have applicability even for liquidated damages in other commercial contracts also.<\/p>\n\n\n\n

Read our article<\/b>:Implementation of Delinking Credit\/Debit Notes on the GSTN Portal<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"

The Hon’ble Bombay High Court in the matter of Bai Mamubai Trust v. Suchitra [Decided on September 13, 2019] held the office of the Court Receiver is an establishment of the High Court through which the orders are being issued by the Court. Therefore, the services of the Court Receiver considered as services provided by any higher […]<\/p>\n","protected":false},"author":18,"featured_media":17270,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16,153],"tags":[1062],"acf":{"service_id":"96"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":4691,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17268"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=17268"}],"version-history":[{"count":6,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17268\/revisions"}],"predecessor-version":[{"id":17322,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/17268\/revisions\/17322"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/17270"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=17268"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=17268"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=17268"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}