Supreme Court Challenges the Constitutional Validity of GST on Lease Payments

Seep Gupta
Seep Gupta at January 25, 2023

Supreme Court Challenges 

The appellant in the present case has filed a Special Leave Petition in the Supreme Court under Article 136 of the Indian Constitution against the order passed by the Bombay High Court dated 2019. In the order, the Bombay High Court relied on its earlier decision of levying “Service Tax” under Chapter V of the Finance Act, 1994 on lease or rent payments.

Contentions raised by the Appellant

The appellant has filed a writ petition before the Bombay High Court challenging the constitutional validity of GST Para 2 of Schedule II to the CGST Act, 2017. The appellant has raised the following contentions:-

  • According to the appellant, under Article 246A of the Indian Constitution, GST can be levied on goods and services. But renting or levying does not come under the preview of any goods and services, so no GST will be levied on renting.
  • Only the state legislatures have the power to levy taxes on immovable property. Thus GST cannot be levied under Article 246A of the Indian Constitution.
  • Further, the appellant submitted that the Bombay High Court’s judgement is in bad taste and is liable to get quashed and set aside.
  • The lease of land does not come under the preview of Entry 49 List II of the Indian Constitution which deals with immovable properties.


Issues Raised

The major issue that was raised in this scenario is whether the lease of land is exempted under the GST tax as GST is only levied upon the “goods and services” and leasing of land does not provide any sort of services. The respondent submitted that a lease of land can in fact contain a service element keeping in mind the broader and wider interpretation of the word ‘Service’ and without actually going into the natural, the ordinary and literal meaning of the word service.


The Supreme Court of India has asked the petitioner to seek and serve the advance copy of the plea which challenges the constitutional validity of GST levying and other taxes on lease or rent payments to the additional solicitor general of India. The additional solicitor general may file a counter-notice. This matter is presently listed for the next date.

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