A recent court decision revolved around the legal analysis of a tenant’s liability for GST payment, resulting in the reinstatement of the defense. The court examined whether rent includes the obligation to pay tax and the permissibility of striking off a tenant’s defense for non-payment. Dive into the insightful legal analysis provided by the court in this complex case.
Facts
- The original plaintiff, who is the landlord, filed an application under Section 13(6) of the Act, 1961
- The application requested the court to strike off the defense of the appellant, who is the defendant and tenant
- The tenant paid rent and other maintenance charges but did not deposit/pay the GST
- Appellant filed a miscellaneous petition before the High Court.
- The petition was against the order of the Trial Court striking off the appellant’s defence.
- High Court dismissed the miscellaneous petition.
- High Court was dealing with the subject matter of the Trial Court striking off the defence.
- The Tribunal had initially allowed the application and struck off the appellant’s defence.
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Arguments
- Learned counsel for the petitioner is ready to deposit the balance amount of GST which is approximately Rs. 5,80,000/-.
- Ms. Rukhmini Bobde, learned counsel for the respondent, requests to address the question of law regarding whether rent includes the liability to pay tax and whether the defence of the tenant can be struck off under Section 13(6) of the Act, 1961, for non-payment of tax.
- Both counsels, Shri Ardhendumauli Kumar Prasad for the appellant and Ms. Rukhmini Bobde for the respondent, have been heard.
- The initial order of the Court on 31.08.2018 allowed an application seeking exemption from filing O.T.
- Respondent’s counsel requested for rent enhancement if the orders against the appellant are set aside.
- The appellant’s defense, which was struck off by the Trial Court and High Court, is reinstated.
- Appellant is permitted to defend the eviction suit on its merits.
- Appellant is directed to pay specified rent amounts for different periods until final disposal of the suit.
- The High Court is instructed to expedite the final decision on the suit within six months.
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Analysis
- The tenant is liable to pay rent of Rs.58,650 per month for 2500 sq.ft. super-built-up area.
- Tenant is also liable to pay maintenance charges and service tax as per the Lease Agreement.
- Defence was struck off due to non-deposit/payment of the balance amount of GST.
- The balance amount of GST has now been deposited by the appellant.
- The High Court and the Trial Court orders striking off the defence of the appellant are set aside.
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Decision
- The tenant may be directed to pay the rent/enhanced rent by giving a periodical rise of 15%.
- The appellant has deposited the balance amount of GST pursuant to the court order.
- Enhanced rent at the rate of 15% till September 2023 will be Rs.1,15,958/-.
- Periodical increase of rent @ 15% every three years is mandated by the Lease Agreement and admitted by the tenant.
- No order as to costs is necessary in the current circumstances.
Case Title: M/S FASHION WORLD Vs. BANSHIDHAR MULTI BUILDERS PVT. LTD. (2022 INSC 1099)
Case Number: C.A. No.-007325-007325 / 2022
