Supreme Court upholds Service Tax on Financial Leasing Services
IT was a constitutional victory for the Service Tax Department in the Supreme Court. And for a record fourth time! The validity of Service Tax with reference to Entry 97 of List I and the competence of Parliament to levy tax on certain services, was before the Supreme Court earlier in
- T.N. Kalayana Mandapam Association v. Union of India - ()
- Gujarat Ambuja Cements Ltd. v. Union of India - ()
- All-India Federation of Tax Practitioners v. Union of India - ().
The Supreme Court once again upheld the validity of a Service Tax levy, this time on financial leasing services including equipment leasing and hire-purchase .
The petitioners made a strong plea that when sales tax is already paid for the transfer of the right to use the goods particularly when such transfer is a deemed sale under Article 366(29A), it is not open to Parliament to impose service tax on the same transaction once again . But the Supreme Court was not impressed and held, “The impugned tax is not on material or sale. It is on activity/service rendered by the service provider to its customer. Equipment Leasing/ Hire- Purchase finance are long term financing activities undertaken as their business by NBFCs ”
Until GST comes, we will have to live with this kind of issues. In every sale , there would be a service and now the Board may look for these services in sales to bring them within the tax net.
We bring you this Supreme Court judgement today. Please see Breaking News.