Renting on Service Tax : With Supreme Court Staying Home Solutions Stay – Stay Orders Obtained By Others May Stand Vacated
Reproduced below is the write-up by Mr. Rakesh Chitkara, Advocate (Delhi High Court) :
Tax on Renting of Immovable Property witnesses another see-saw game. Trade and the Govt. are delighted or gasping in turns and at every twist.
Supreme Court on 10th January, 2011, has stayed the operation of the Delhi High Court’s Order in the case of Home Solutions Retails India Ltd. vs. Union of India & Others dated 18/5/2010 in WP(C) No. 3398/2010, inspite of the validation amendment in 2010 with retrospective effect. The definition itself was amended to declare renting per se as a taxable service and to nullify the Delhi High Court’s judgement of 18-4-2009 in the case of Home Solutions Retails India Ltd. vs. Union of India & Others in W.P. (C) No. 1659/2008.
Subsequent interim order dated 18-5-2010 by DHC were primarily to grant stay from recovery, if the petitioner has approached the court in respect of property located in the jurisdiction of Delhi High Court (means within Delhi) or is assessed to Service Tax in Delhi Commissionerate (means Delhi+ Haryana)
UOI’s appeal against above interim order in the Supreme Court in SLP (Civil) CC No. 16960/2010 was heard on 10-1-2011. There was a one-sided presentation by the Govt.’s Counsel on the orders of the Delhi High Court, seeking directions. The main warrior, Harish Salve who argued the case before Delhi High Court on 14.1.2010 was busy elsewhere. To the shock of the trade’s advocates present, Hon’ble Supreme Court granted an interim stay on the operation of the Delhi High Court order dated 18-5-2010 till the next date of hearing i.e., 20-1-2011. Implication being that the consequent stay orders granted by DHC also would stand vacated.
Mr. Harish Salve then rushed before the same 3-member Bench in the late afternoon to make a mention, but by then it was too late.
Noteworthy that the SLP filed by UOI against Delhi High Court’s earlier judgment and order dated 18-4-2009 is listed for hearing before the Supreme Court on 24-1-2011.
Even the final hearing in this case challenging the amended validation provisions is also slated in Delhi High Court on 25-01-2011.
[Copies of the Supreme Court Order dated 10.1.2010 and Delhi High Court Order dated 14.12.2010 are attached.]
Delhi High Court had in its earlier order reported of 2009 had held that renting of immovable property by itself is not a service.
In the backdrop of P&H High Court judgement favouring Revenue, against which an SLP would have been filed in Supreme Court, the anxiety amongst the assessees mounts, and the see-saw is leading to more uncertainity.
The ST Department is like an elephant and will take its time to get up (react). It has to await instructions from the CBEC which deals directly with Supreme Court. Hardly any steps will be taken by the Department till some clarity emerges in hearings slated on 20th and 24th in Supreme Court and 25th in Delhi High Court.
Otherwise also, not a single rupee has been returned anywhere in India against refund claims filed by assessees after the favourable Delhi High Court judgement.
If the Supreme Court decides against Revenue on the main issue that renting is not a service, validation provisions will die a natural death consequently.
Will the determined Govt. backdown then or will it this time bring an amendment to the Constitution itself ?
Headache mounts for the trade.
CAclubindia
