Liability

This query is : Resolved

Ravi Nallipogu (Querist)
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30 September 2014 Dear All,

Please clarify.

Facts:

Renting of immovable property services
1. Date of rental agreement - Apr10
2. Para says in rental agreement if any service tax levied on lessor the proportionate service tax shall payable by lessee.
3.Landlord not registered under service tax till sep 14
4.Demand raised by the ST dept on landlord with retrospective effect
5.Whether he can pass liability to tenant either prospective or with retrospective

Kindly share your view on this .

MOHAMMAD SALIM

MOHAMMAD SALIM (Expert)
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01 October 2014 Prima facie the service tax being an indirect tax is recoverable from the service recipient. However whether we can pass the service tax on tenant or not depend on contractual terms. In case the same cannot be recovered the amount recieved would be regarded as inclusive of service tax and service tax would be computed by grossing up.

Hope this settles the issue...

Ravi Nallipogu

Ravi Nallipogu (Querist)
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04 October 2014 Thanks for reply.

Is there any other provision to avoid tax liability with retrospective . Since landlord not accepting for grossing up.
Kindly share.

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MOHAMMAD SALIM

MOHAMMAD SALIM (Expert)
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04 October 2014 If the amount of total rentals do not exceeds 10 lakhs in a year and the landlord is not providing any other taxable service, then service tax would not be applicable.... Further service is not applicable in case of renting of residential property for residential use....Else within four corners of law there is no exemption.