Service Tax - Renting of Immovable Property - Supreme Court Stays Recovery
YESTERDAY, DDT reported that the matter is in appeal before the Supreme Court. It seems the Board was ready with a circular to the field to recover the Service Tax from all the petitioners, who were enjoying a temporary stay from the Bombay High Court till 30th September. It was known to everyone (except the Government of course) that the petitioners, who lost the case in Bombay High Court, would be approaching the Supreme Court with an SLP before 30th September. That is what happened.
The Supreme Court has:
++ Granted Leave (SLP)
++ Allowed the appeals to be heard on the SLP Paper Books.
++ Granted permission to the Petitioners before the High Court to file individual applications for interim relief.
++ Directed that no coercive steps shall be taken against the petitioners for recovery of arrears of service tax due on or before 30th September 2011.
++ Clarified that there is no stay of imposition of service tax under sub-clause (zzzz) of clause (105) of Section 65 read with Section 66 of the Finance Act, 1994 (as amended), insofar as the future liability towards service tax with effect from 1st October 2011 is concerned.
So, the petitioners get a respite till the next date of hearing – 14th October 2011.
But finally, what is going to happen? Do they hope to succeed in the Supreme Court? Even if they do, will the Government keep quiet? Are they trying to salvage interest and penalty? Is litigation an academic exercise?
For the record, not a single tax out of the more than a hundred services on which tax had been imposed, went out of the statute as a result of litigation and the highest Court has upheld all retrospective legislation.
Though the Revenue Department must have been taken aback by the decision of the Supreme Court, they will have the last laugh – and they know it!