Service Tax on Renting of Immovable Property – live and kicking
Recently, a very reputed Company ABC Ltd (name changed) providing office space to various clients came to me for an advice. Their problem is, after the Delhi High Court judgement in case of Home Solution Retail India Ltd () some of their clients have stopped paying service tax. Though the invoice is issued with service tax, only rent is paid, but service tax is not reimbursed. Since the clients are not paying service tax, ABC Ltd is not paying the service tax to the Department. Department is insisting the assessee to pay service tax. ABC Ltd is showing the unrealised service tax amount in the “Service Tax payable account” in their books of accounts, which is likely to be objected by their statutory auditors as they may qualify that service tax is not paid in time.
This is not the problem with only ABC Ltd, but same is the case with all the service providers. All the clients are aware of the Delhi HC judgement and stopped paying service tax, but little did they realise that in tax matters, only the decision of two authorities are final. One the Inspector of Central Excise and the other is Supreme Court. Of late, not even the Supreme Court decision is final as there is always retrospective amendment route to undo the judgements.
In any case, the departmental officers have been directed by the TRU to either pursue the tax payers to pay up the service tax due or take necessary action to safeguard revenue as the dispute has not reached finality and the department has filed an appeal against the order of the Delhi High Court.
F.No . 336/10/2009 TRU dated 17th July 2009.