Tuesday, May 31, 2011

Service Tax on Immovable Property: Current Status

Service Tax on Immovable Property

Current Status: The Service Tax has to be levied and may be collected by the Government.

Updates: The following are the specific updates regarding the retrospective imposition of service tax.

List of events:-

I. DELHI HIGH COURT

1. The Finance Act, 1994 imposes Service Tax on renting of immovable property.

2. The Hon'ble Delhi High Court holds this renting to be unconstitutional.(Home Retail Solutions v. UOI)

3. The Central Govt. appeals to the Hon'ble Supreme Court.

4. The Legislature amends Finance Act, 1994 to override the decision of the Hon'ble Delhi High Court and imposes Service Tax on renting of immovable property retrospectively.

5. The Hon'ble Delhi High Court stays the imposition of service tax and holds that the Union Govt. cannot impose the tax. (in Writ Petition No. 3398/2010 on May 18, 2010)

6. The Union Govt. approaches the Hon'ble Supreme Court. The Hon'ble Supreme Court vide an order dated January 10, 2011 stays the order of the Hon'ble Delhi High Court and holds that the Union Govt. may impose the Service Tax. On 4th February, while continuing the stay order on the Delhi High Courts orders, it further holds that the Hon'ble Delhi High Court should hear the matter expeditiously.

7. The final arguments in the Hon'ble Delhi High Court concluded in the last week of May, 2011 . Order expected in the first week of June by the Hon'ble Delhi High Court. The stay by the Honn'ble Supreme Court on the Hon'ble Delhi High Court's orders continues.

II. PUNJAB AND HARYANA HC

1. Meanwhile, a similar matter came up before the Punjab and Haryana High Court. The P&H HC has upheld the constitutional validity of the service tax on immovable property. (vide Shubh Timb Steels Ltd. v. Union of India, CWP 11597 of 2010)Link
Further read:

1. Economic Times report
2. Opinion of Mr. Vivek Tankha, Additional Solicitor General, Govt. of India
3. Report by CNN-IBN
4. Report on the Internet

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