20 April 2009
Please refer the following order of Delhi High court dated April, 20th 2009:- Companies cannot be subjected to service tax for renting premises to run their businesses, the Delhi High Court has ruled while disposing of petitions filed by some retailers against a government directive.
The court struck down Centre's notification, by which renting of immovable property for use in the course of business was brought within the ambit of service tax.
"We hold that law does not in terms entail that renting out of immovable property for use in the course of furtherance of business or commerce would by itself constitute a taxable service and be eligible to service tax," Justice B D Ahmed said.
The court passed the order on a number of petitions filed by corporate houses in retails sector, including Shopper's Stop, Lifestyle International and Fun Multiplex, challenging Finance Ministry's notification issued in 2007 by which rent was made taxable.
"The interpretation placed by the impugned notification and circular on the said provision is not correct.
Consequently, the same is ultra vires the said Act and to the extent that they authorised the levy of service tax on renting of immovable property per se, they are set aside," the court said.
my question is whether this is applicable to all across the india or in the satate of New Delhi.
20 April 2009
Mr Choudhary This will act as a bench mark judgement on this issue, & all courts will take the same view & since some high court of our country have given this judgement,again the High court have verdicted it as unconstitutional so it will form a strong citation as service tax is a central levy & not a state levy, so be relaxed & sure that it will be taken as per verdict of Delhi High Court unless the central Govt challenges it in the supreme court & gets stay order or judgement scrapped by the supreme court.
Decision given by Delhi Highcourt is bound in delhi and other states of india may take its referance as service tax is central tax and decision may applie on whole of india except any reverse openion comes from other states Court not come. But in case of other states, you may take referance but not conferm and if required you may also go for petation if that state sevice tax department not agree with that.
20 April 2009
I think it may not have any effect of levy of service tax on renting of immovable property per se since the judiciary cannot overrule the legislative enactments.
CAclubindia
