service tax on renting of immovable property

Hi all
My query is as under :-
Mr. A has two tenants in a commercial building in Chandigarh, T1 & T2.
The total rent amount being derived by A from these is more than 10 lacs and he has taken the registration under service tax.
Mr. A raised the bill to T1 & T2 (Rent amount + service tax) and the same was duly paid by T1 & T2 and the service tax due was accordingly deposited by Mr. A with the revenue.
But the tenant T1 stopped the payment of service tax w.e.f. september 2008, by giving reference to the judgement of the Hon'ble bombay high court in the case of

Retailers Asso. Of India (RAI) vs. Union Of India
NOTICE OF MOTION NO.173 OF 2008
IN
WRIT PETITION NO.1263 OF 2008

Here, T1 is member of RAI and a company incorporated in Mumbai. Since T1 didnot pay the service tax , Mr. A also didnot deposit anything on account of this since nothing was recieved by him.
The tenant T2 continued with the payment of service tax and the same was duly deposited by Mr. A with the revenue.
Here, the revenue is insisting on deposit of service tax on rent recieved from tenent T1.

Now, the question is :-

1)Is the judgement of Hon'ble Bombay High Court applicable to the property in Chandigarh taken on rent by T1.??

2) Is Mr. A required to deposit any service tax on rent recieved from tenant T1 ??

Please advise on the matter.


Attached File : 31 judgement.pdf downloaded: 249 times
Replies (4)

Take a specific refusal of payment of service tax by T2 on his letter head and iform it to the department. That way you will not have any liability fo interest and penal provision.

The matter has been transferred to Supreme Court and next date of hearing is 27.03.2009- things should be clarified on that day. Further the order of Supreme Court will have all india effect.

thanx for the reply sir ..

wel, the company has given us a letter mentioning that they are not required to pay the service tax .... We did submit the copy of the letter of the company along with the copy of judgement given by them but the assessing officer is saying that the judgement of Hon'ble Bombay high court is not applicable is not applicable to chandigarh and so is insisting on us to deposit the service tax .......

what should be our course of action  

Service tax payment liability arose on you when the service receiver makes payment to you. If he is not paying to you, for whatever reson- justified or unjustified, you have no liability to pay service tax.

Sir,

Please update us the decision given by Supreme Court  on 27.03.2009 for service tax on rent on Immovable properties.

 

Regards,

 

Geetha.

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