CA Final Student
479 Points
Joined September 2008
The Government is considering appeal against the delhi HC order and matter will be moved to SC. There can be three possibilities - 1. Government may come successfully in appeal, 2. Govt may not come successfully & 3. If government don't come succefully, it may further move to pass a bill in the parliament to make the leavy constitutional. It may or may not be retrospectively since the leavy was already been introduced by a bill passed by the house of parliaments. In all the situations, the probability is more turned toward leavy of service tax on rent of immovable property. Assessee can discontinue paying service tax based on Delhi HC judgement. But if any of the above probability happens, it will again liable to pay service tax. The best option could be as follows -
1. To take undertaking from tenants that in the event any future liability of service tax on rent in question arises, they shall pay it to the assessee and in turn, assessee will pay it to the credit of central govt.
2. To discontinue paying service on the above undertaking basis.
3. To provide copies of challan of payment of service tax and the relevent record such as copies of invoices etc. to the tenants to enable him to file claim of refund of service tax. The assessee cannot on his own file the refund of service tax since the incidence of duty has already been passed on to the tenant and it will result in unjust enrichment to the assessee.
4. If in future, the liability of service tax arises due to any of the aforesaid possibility, the assessee can defend the case of non leavy of interest & Penalty on service tax on the ground of Delhi HC judgement.
CAclubindia
