service tax issue

Queries 660 views 2 replies

Naresh kumar Golchha

business

28 Points Posted on 18 June 2009

I am registered in service tax with rent a immovable property category. I had raised bill to my tenant i.e. Rent amount rs.100000.00 add service tax rs.12360.00 total =rs.112360.00 . But i received payment agst rent amount only i.e.rs.100000.00 after deducting tds. My tenant say that he will not pay service tax amount as it is not in the service tax rule. What is my liablity should i pay service tax on amount received rs.100000.00. and what about the service tax amount. And my question is service tax payable on the receipt of payment or not. And if i had not received the payment for more than 3 years is there a time limit for service tax . As service tax rule says service tax deposit when we received the payment

Replies (2)

Rekha

MANAGER - FINANCE & ACCOUNTS

1445 Points Posted on 18 June 2009

The Delhi High Court, on 18 April 2009, delivered an important judgment concerning the application of service tax. In this judgment, which will apply across India, the court distinguished between "any service in relation to renting of immovable property" vis-a-vis "renting of immovable property" per se, and held that only the former is liable to service tax and not the latter. As a consequence, when property is rented without any underlying services (such as air conditioning, standby power, sanitation and/or water supply services etc) it should not attract service tax and when property is rented out with services, only the services portion will attract service tax. Until such time as this decision is either successfully appealed or the government amends the legislation (to give effect to its intentions of levying service tax on rent amount), businesses which cannot recover service tax should not suffer it on renting of property.Service Tax is on Receipt basis only.. you need to pay as and when u receive the amount.

Madhukar N Hiregange

Chartered Accountant

39039 Points Posted on 18 June 2009

There are 2 separate issues as under:

1) Whether ST is liable on rental? The DHC has held that ti is not. SC while admitting the appeal against the DHC decision has NOT granted stay. It appears that the case is substnatially in favour of the landlord.

2) Once ST assumed to be liable and charged. Then amounts recived are cum ST and if 100,000 recived wouldbe broken up into 90,662 basic + 9338 ST.

If tenant not willing to pay take an udetaking from him that he will pay if case decided in favour along with interest and intimate dept in wirting of the same and take dated acknowledgement.