service tax on renting to government

Queries 1414 views 4 replies

mukundasy

manager

97 Points Posted on 25 May 2009

Dear All,

I got to know from the forum that we have to levy VAT for the hiring of equipments even if it is rented for Government departments. Thanks for the same.

My other doubt is that whether we should collect the service tax on the rent of immovable property if it is rented to Government departments. I had two queries in this case. First of all there is a circular or notification or even a inter office memo dated 17 December 2007 stating that we need not collect the service tax on the renting of immovable property to Government which I am not able to get it. Can I get it?. My second query is relating to the striking down of service tax on rent from immovable property which was passed by the Delhi cout. Is it applicable to the whole of India and is it that we need not collect service tax from the tenants until a proper decision is taken by the Government in this issue.

With Regards,

Mukunda

Replies (4)

Madhukar N Hiregange

Chartered Accountant

39039 Points Posted on 26 May 2009

I am not aware of any such circular exempting the rent to Govt dept. Since these could have been issued anywhere across India anybody has the same can post. It maybe noted that the SC in the case of Ratan Melting Industries has held that circulars which are not in line with the provisions are no est in law and therefore relying on the same could be dangerous.

However the commercial buildings may in normal course be liable whether let out to Govt or others where there is a presumption that the same is for commerce. However if it can be proved that it is not for use in furtherence of business or commerce then the coverage under this head can be avaoided.

mukundasy

manager

97 Points Posted on 26 May 2009

Sir,

Thanks for your reply.

If you could refer to the letter no.137/280/2007 dated 17 December 2007 and the link https://www.taxmanagementindia.com/Site-Map/Service-Tax/List_Circular.asp?year=2007 regarding the applicability of service on leasing/renting to government offices.

Also let me know to whether the decision passed by the Delhi court stands good in this issue.

With Regards,

Mukunda

Rajesh Kumar

Advocate- Tax

7811 Points Posted on 27 May 2009

Governance is neither a business nor a commerce- that way there should not be any service tax.

Madhukar N Hiregange

Chartered Accountant

39039 Points Posted on 28 May 2009

The DHC decision deals with whether pure renting is a value added activity or not and comes to a conclusion that it is not. Further that only services in relation to renting are liable not renting itself per se.