ST - The contention that the person, to whom the burden of tax is ultimately passed on, is entitled to challenge a levy, if accepted, would lead to disastrous consequences - SC Dismisses SLP
THE Supreme Court yesterday dismissed an SLP filed by a service taxpayer against a judgement of the Madras High Court.
The High Court had in the case reported by us in held that:
Service Tax - Construction Service - Joint Development Agreement - Writ Petition by landowner seeking to declare the CBEC Circular No 151/2012 dated 10.02.2012 and TRU letter dated 20.01.2016 as unconstitutional.
Maintainability - The writ petition is not maintainable, inasmuch as the law makes the service provider liable to pay service tax. It is always open to the service providers either to pass on the burden to the recipient of the services or not to pass it on. Under Clause 23 of the agreement for development, the petitioner and his siblings, who are the service recipients, agreed to take the burden to the extent they are liable. Therefore, the circulars, cannot be challenged by the petitioner.
Locus standi - The contention that the person, to whom the burden of tax is ultimately passed on, is entitled to challenge a levy, if accepted, would lead to disastrous consequences. Any increase in the incidence of sales tax affects all consumers of all products. Millions of consumers are entitled to come and challenge such levies, if such a contention is accepted. Therefore, the petitioner has no locus standi to challenge the above circulars.
Exchange of land with constructed area amounts to service by builder - It is not an easy proposition that it was a transfer of immovable property by way of sale or exchange - The agreement gave rise to a bouquet of rights for the builder. One was to put up a construction of an area, a part of which could be sold by them to third parties. They could be sold not only as such, but also along with the undivided share of land. Those parties had certainly availed the services of the builder as a service provider. The petitioner did not stand on a different footing than those persons. Therefore, the challenge of the petitioner to the circular, apart from the question of locus standi, does not merit acceptance.