18 June 2009
I AM REGISTERED WITH SERVICE TAX DEPARTMENT-RENT A IMMOVABLE PROPERTY. I AM RAISING THE BILL TO MY TENANT RENT OF RS.100000.00 PLUS SERVICE TAX RS.10300.00. I HAD RECEIVED PAYMENT ON THE RENT AMOUNT ONLY I.E. ON RS.1 LACS MY TENANT REFUSES TO PAY SERVICE TAX AS HE IS SAYING THAT SERVICE TAX IS NOT APPLICABLE ON RENT A IMMOVABLE PROPERTY. MY QUESTION IS I HAD TO DEPOSIT SERVICE TAX ON RS.1 LACS AS I HAD NOT RECEIVED THE SERVICE TAX AMOUNT. MY TENANT SAY THAT THIS IS EXEMPTED SERVICE. MY QUESTION SERVICE TAX PAYABLE ON THE RECEIPT OF PAYMENT ONLY OR ON BILL RAISED.
18 June 2009
Finance Act 1994 which Govern the Service Tax levy, clarified that the amount so received is treated as Gross Amount i-e The Rent received by u from tenant shall be treated as including Service Tax Therefore calculation of service tax shall be Rs.100000/112.36 x 12.36 the Service tax comes Rs.11000 you have to pay this amount whether your tenant agree or refuse is immaterial
18 June 2009
Your tenant is some what correct due to the reason that some of the State High Courts have passed judgements in favour of the assessees contesting the constitutional validity of the enactment of Renting of immovable Property Service. The matter has been reviewed by Central Government (I am not wrong) to Supreme Court keeping in view the judgements passed by 2/3 state high courts.
Pending this your tenant is right on his part to deny payament of service tax on Rent.
You may advise the tenant that in the event of supreme court decision in favour of revenue, the consequential service tax with interest and penalty will have to be re-imbursed by him and to that extend you can withhold his rent advance in the event he vacates your property in advance.
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