Servive Tax on Immovable property

This query is : Resolved

vinay ahuja (Querist)
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14 March 2008 Our tenent, State Bank of Indore,is refusing to PAY the service tax on monthly rent.The tax was imposed by the government on 01.06.2007.The bank actually paid the service tax for three months i.e. Sept07 to Nov'07 alongwith the rent for each month after deducting T.D.S. on total amount.
Now they say that it was paid by mistake.Then they have taken back the service tax amount for three months from the rent of Dec.2007. Is it legal to do that? Can they withdraw money from our current account without our permission ??
Our lease was signed prior to imposition of Service tax.
What is the recourse that we have. How can we get this amount of 12.36% of rent from them ? Can we get the buiding vacated if they do not pay the service tax ??
Thanks,
Vinay K. ahuja

CA Hemant T Dewani

CA Hemant T Dewani (Expert)
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14 March 2008 when you give premises on rent you made
aggrement what you write in the agrement that is important if all taxess are paid by tenant then service tax will be collected and paid by you to the govt.
if in aggrement the rent is included of all taxess then service tax is include in the rent and you will issue bill show service tax separetly.
tds will be deducted on net rent received
not including of service tax

vinay ahuja

vinay ahuja (Querist)
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15 March 2008 The agreement says talks about the Municipal taxes and property taxes to be paid by the landlord and nothing else.

Also the agreement says That the lessee shall abide by and comply with at its own cost, all the statutes concerning the said property.

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Shyam Lal Naik

Shyam Lal Naik (Expert)
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15 March 2008 The bank's action is absolutely wrong. Debiting your account is also absolutely without authority.

It is unfortunate, in our country, PSU's replaces themselves for the legislature.

If it is improper on your part to charge Sevice Tax, then it is improper on the part of the banks to charge service tax on banking services provided to customers.

The service tax is revenue neutral for the bank. It will be available as cenvat credit to them.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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15 March 2008 Unfortunately, it is due to a drafting lapse of the agreement taken advantage of by the bank. It is normal to provide a clause in the agreement all statutory levies extra.