Service Tax on Renting - Retailers to pay half tax by March 2012, while Home Solutions gets two weeks to calculate
THE Supreme Court last Friday gave interim orders in the famous renting cases. Though the gist of the orders was widely circulated, the orders were not available till today. A peep into the two famous cases:-
Retailers Association of India vs. Union of India: In the order dated 30th July 2008 (), the Bombay High Court directed the petitioners to file undertaking in the Court stating that in the event the challenge is disallowed, they shall make payment of service tax due and payable in accordance with the aforesaid provisions as may be directed by this Court. It was further directed that in case such undertaking is given, the person who is submitting the undertaking shall not be entitled to transfer his interest in the property in relation to which the demand of service tax is made without first giving two weeks prior notice of his intention to transfer his interest and the nature of the transfer to the Respondents. In case within the period of two weeks, objection is raised on behalf of the Respondents to the proposed creation or transfer of interest, then no interest will be created or transferred without seeking leave of the Court.
In its order dated 4th August 2011 (), the High Court upheld the validity of the tax as well as the retrospective amendment.
In its order dated 28 th September 2011, the Supreme Court directed that there will be no recovery of arrears due on or before 30th September, 2011. The Supreme Court clarified that there is no stay of imposition of service tax insofar as the future liability towards service tax with effect from 1st October, 2011 is concerned.
Now, in the latest Order dated 14 th October 2011, the Supreme Court directed:
1. The appellants to deposit 50 percent of the Service Tax payable in three installments by 1st March 2012.
2.The appellants to furnish surety for the balance amount.
3. The successful party will be entitled to interest.
4. Default in deposit would result in vacation of stay.
Home Solutions vs. Union of India: In the order dated 18th April 2009 (), the Delhi High Court struck down the Service Tax on renting as the tax was on service in relation to renting and not on renting per se . This judgement prompted to Government to bring in the retrospective amendment.
By the order dated 18th May 2010, (), the Delhi High Court stayed the recovery of tax even after the amendment by the Finance Act 2010.
By the order dated 14th December 2010 (), the Delhi High Court directed the Interim Stay to continue.
By its order dated 23rd September 2011, the Larger Bench of the High Court upheld the levy as well as the retrospective amendment.
Now, in the latest Order dated 14th October 2011, the Supreme Court directed:
1. Petitioners to place on record the details of the arrears towards the service tax upto 30th September 2011, within two weeks.
2. In the meantime, no coercive steps shall be taken against the appellant for recovery of arrears of service tax due on or before 30th September, 2011.
The Supreme Court clarified that there is no stay of imposition of service tax insofar as the future liability towards service tax with effect from 1st October, 2011 is concerned.
We bring you these orders today. Please see:
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