The service tax is dealt with the finance act and is the levy which is not having own act. The task of administration is entrusted to the Central Board of Excise and Customs. When the service tax imposition was first ever started in India no body have thought that so many services would be brought under the net of service tax. Now even more than 100 services are there coming under the tax net. The most debatable service tax levy is on Renting of immovable property.
The section 65(105)(zzzz) of the finance act deals with the provision of renting of immovable service. Before the budget of 2010 the situation was bit clear that the service in relation to the renting of immovable property is service but not the renting per se. The language of the clause is reproduced below:
"To any person, by any other person in relation to renting of immovable property for use in the course or furtherance of business or commerce".
From the above it is very much clear that only the service in relation to renting of immovable property is service.
But the amendment in budget 2010 was not imagined by any one. There was a retrospective amendment w.e.f June 2007 brought in the clause zzzz as follow:
"To any person, by any person, by renting of immovable property or any other service in relation to such renting , for use in the course of or, for furtherance of, business or commerce".
This amendment has shocked everyone in a sense that the matter was disputed in various court of law on the ground of constitutional validity of the charging of Service tax on Immovable property. The litigation was pending before the courts. That too the amendment was given retrospective effect.
This amendment was again challenge in various courts (please note that in none of the case before amendment any decision were awarded by any court) and the matter was pending.
On 14/10/2011 the Hon'l Supreme Court of India has passed an Interim Order in the case of Retailers Association India Vs. Union of India & others directing the members of the RAI to deposit the 50% of the service tax pending upto 30.09.2011 within six months in a three equated installments. The first instalment should be deposited by 1st November 2011 , 2nd by 1st January 2012 and 3rd by 1st March 2012. And for Balance 50% give an undertaking in surety to pay service tax once the matter is decided.
Nothing has been told in the order regarding payment of Service Tax collected after September 2011.
In my view it would be better to start collection of service tax on renting of the immovable property and deposit regularly. It seems difficult that the SC will pronounce its judgment in favour of assessee.
Best Regards
Yogesh
CAclubindia
