No GST For Services Of Court Receiver : Bombay HC [Read Judgment]

In Bai Mamubai Trust v. Suchitra, the High Court of Bombay delivered a judgment on the question whether GST is leviable on the services provided by the Court Receiver appointed under Order XL of the Code of Civil Procedure, 1908. The judgment was rendered by Justice S.J. Kathawalla. In the said case the court had appointed Mr. V. Sreedharan, Senior Advocate, as Amicus Curiae. The following issues were decided by the court: Whether GST is liable to be paid on services or assistance rendered by the Court Receiver appointed by this Court under Order XL of the CPC? Whether GST is liable to be paid on royalty or payments under a different head paid by a defendant (or in a given case by the plaintiff or third party) to the Court Receiver in respect of properties over which a Court Receiver has been appointed? Specifically, in the facts of the present Suit, where the Plaintiff alleges that the Defendant is in illegal occupation of the Suit Premises: Whether there is any 'supply' within the meaning of the CGST Act? Whether payment of royalty for remaining in possession of the Suit Premises, either during the pendency of the Suit, or at the time of passing of the decree, falls within the definition of 'consideration' for a 'supply' chargeable to payment of GST under Section 9 of the CGST Act? If in any circumstance GST is payable or applicable to payments made to the Court Receiver, how is that statutory liability to be discharged? Is it to be paid by the Defendant / party in occupation directly, or by the Court Receiver? As per the facts of the case, the Plaintiff had filed a suit seeking to recover possession of three shops, which as per the Plaintiff is under the illegal possession of the Defendant. The court appointed a Court Receiver who was directed to take formal possession of the Suit Premises and the Defendant was permitted to remain in possession of the Suit Premises as an agent of the Court Receiver under an agency agreement to be executed with the Court Receiver, on payment of monthly ad-hoc royalty of Rs. 45,000 but without any security alongwith GST at the applicable rate. According to the Plaintiff, if and when the royalty amount is paid over by the Court Receiver to the Plaintiff, the same would be treated as 'Income' of the Plaintiff falling under the category of 'Income from letting out and use of a shop / commercial premises'. Further, as per the Plaintiff, GST will also be liable to be paid on the royalty amount finally transferred to the Plaintiff. Findings of Court: Issue No. i: It was held by the court that GST cannot be levied or recovered on services provided by the Court Receiver. Relying on the precedents, the court held that the office of the Court Receiver is 'an establishment of the High Court' and 'a permanent department of the High Court'. Therefore, the services, being charged by a permanent department of the Court, pursuant to orders passed by the Court from time to time, are to be considered as 'Services by any court or Tribunal established under any law for the time being in force' which is Item No. 2 of Schedule III to the CGST Act and to be treated neither as a supply of goods nor a supply of services. It was also clarified that the Court has not considered the issue in the context of a private receiver who may be appointed by the Court under Order XL of the CPC. Issue No. ii and iii: Relying on Section 92 of the CGST Act, the court held that GST may be determined and recovered from the Court Receiver by reason of the Court Receiver being akin to a 'representative assessee'. However, the court held that whether or not GST is applicable depends on the nature of the cause of action pleaded by the Plaintiff or the order of the Court directing payment and which sets out the terms of receivership. "On a reading of Section 92 of the CGST Act it is clear that GST may be determined and levied from the receiver if: a. The receiver is in control of the business of a taxable person b. A taxable event of supply has taken place with respect to such business on account of which the estate of the taxable person would be liable to tax, interest or penalty under the CGST Act. Section 92 of the CGST Act clearly contemplates that GST may be levied on and collected from the Court Receiver with respect to a business under its control provided that the taxable event of 'supply' for such levy of GST has taken place. 50. The requirement of a 'supply' is essential. It is the taxable event under the CGST Act. If there is no supply, there can be no liability for payment of tax (or any interest or penalty thereon).", held the court. With respect to the case at hand, the court found that the royalty is paid towards damages or compensation or securing any future determination of compensation or damages for a prima facie violation of the Plaintiff's legal right in the Suit Premises. ...

No GST For Services Of Court Receiver : Bombay HC [Read Judgment]

Ammu Charles

The amounts collected by the Court Receiver may be subject to GST depending on fact situation, added the Court.

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