Applicability of service tax on Returnable Rental Advance

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CHANDRASEKAR (Querist)
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22 June 2009 Respected Sirs,

Please clarify whether service tax is applicable on Returnable rental Advance. If applicable the relevant provisions of Law and if No relevant case laws etc

Best Regards
A Chandrasekar

Jitender

Jitender (Expert)
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23 June 2009 service tax is not applicable on refundable deposit.

Sanjeev Jain

Sanjeev Jain (Expert)
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23 June 2009 See Service tax is levied on receipt basis as and when you receive any amount covered u/s 65(105) of Service Tax Law you will become liable to pay Service Tax on it.

But as per the recent Judgment given by Hon' able Delhi High Court in the Case of Home Solution Retail India Ltd V. UOI that Rental of property is not a value addition and hence no service tax can be levied and passed the order in favour of assessee. Do remember to collect Service Tax on Renting property b'coz neither Supreme Court upheld the judgment nor any amendment made in this regard by the Ministry of Finance.

As i go through your case i come to know that you have received Rental on returnable basis. service Tax is attracted as you collect the amount and can be adjusted in subsequent return in case you return the amount of Rent.

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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23 June 2009 Service Tax is not leviable.

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