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2016 DIGILAW 539 (GUJ)

Rajesh Jethmal Shah v. Union of India

2016-03-04

ANANT S.DAVE, R.SUBHASH REDDY

body2016
ORDER : Anant S. Dave, J. 1. By way of these writ petitions filed under Article 226 of the Constitution of India, the petitioners beg to challenge the legality, validity and vires of notification No. 24/2007 : dated 22.5.2007 and circular No. 98/1/2008-ST : dated 04.01.2008 issued by the Secretary, Ministry of Finance, Department of Revenue, Government of India, New Delhi. It is submitted that by virtue of the said notification and circular, a completely erroneous interpretation is placed on Section 65(90a) and Section 65(105)(zzz) of the Finance Act, 1994 as amended by Finance Act, 2007. It is submitted that because of the incorrect interpretation, service tax is sought to be levied on the "renting of immovable property" as oppose to service tax on a service provided "in relation to renting of immovable property". The petitioner also seeks an appropriate writ, order or direction from this Hon'ble Court not restrain the respondents from charging service tax on the renting of immovable property and also seeks further appropriate writ, order or direction to direct the respondents to refund the service tax paid by the petitioners on the renting of immovable property. Certain facts are not in dispute but Mr. Arpit Kapadia, learned counsel appearing for the petitioners in all these petitions fairly state that issue involved in these writ petitions is no more res integra in view of decision of this Court in the case of Cinemax India Ltd. v. Union of India [2011] 12 taxmann.com 492/32 STT 359 where in the context of challenge to notification No.24/2007. S.T., dated 22nd May, 2007 and with regard to question of law involved therein about validity of sub-clause (zzzz) of clause (105) of Section 65 of Finance Act, 1994 as amended by Section 75(5)(h) and Section 76 of the Finance Act, 2010 came to be rejected and even SLP preferred before the Apex Court was also rejected, these petitions are heard together and disposed of by this common judgment. 2. That in earlier writ petition in the case of Cinemax India Ltd. (supra) basic facts were recorded as under:-- "2. In most of the petitions, the petitioners are tenants paying rents or license fees or business conducting fees for leasing/licensing of immovable properties in their favour for conducting/operating business from the said immovable properties in the course of business activities. That in earlier writ petition in the case of Cinemax India Ltd. (supra) basic facts were recorded as under:-- "2. In most of the petitions, the petitioners are tenants paying rents or license fees or business conducting fees for leasing/licensing of immovable properties in their favour for conducting/operating business from the said immovable properties in the course of business activities. Apart from the rent paid in case of the properties taken on rent or conducting fees basis, the petitioner companies pay 'Common Amenities and Maintenance' ("CAM") charges on which service tax is charged and duly paid. They also reimburse dues for electricity and water on actual consumption and duly supported by the bills. 3. During the course of their operation, the petitioner companies also receive rent or license fess or conducting fees or leasing, licensing or use of immovable properties. In these cases also, wherever agreements so provide, the petitioner companies get reimbursed in respect of dues for electricity, water, housekeeping, security etc., which are based on actual consumption and duly supported by bills. 4. The Finance Act, 2007 amended Section 65 of the Finance Act, 1994 and defined 'renting of immovable property' including renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce with certain exclusions. Clause (105) of Section 65 of the Finance Act, 1994, which defines 'taxable service' was also amended to introduce sub-clause (zzzz), which provided that a service provided by any other person in relation to 'renting of immovable property' for use in the course or furtherance of 'business or commerce'. 5. By Notification No. 24/2007. S.T., Dated 22nd May, 2007, the effective date for levy of service tax on renting and leasing an immovable property was notified as 1st June, 2007. According to the petitioners, the entire object and purpose of the service tax provision was to tax certain categories of services 'in relation to' renting of any immovable property for use in the course or furtherance of business or commerce. Thus, according to the petitioners, what the Revenue sought to tax was not the 'renting of immovable property', but in fact any service provided or to be provided to any person, by any other person, 'in relation to renting of immovable property' for use in the course or furtherance of business of commerce. Thus, according to the petitioners, what the Revenue sought to tax was not the 'renting of immovable property', but in fact any service provided or to be provided to any person, by any other person, 'in relation to renting of immovable property' for use in the course or furtherance of business of commerce. It was contended that on a bare reading of the provision itself, it was apparent that the same does not impose a tax 'on renting or taking the premises on rent. This is, because, there is no value addition by any act of the owner of the premises, in renting his property to another person. 6. By circular No. 98/1/2008-S.T., dated 4th January, 2008, the Ministry of Finance, Government of India authorised proceeding of recovery of service tax on the same assumption that renting out of immovable property was by itself a service." 3. After relying on various case laws and provisions of Finance Act, this Court in paragraphs 44 and 45 held as under:-- "44. For the reasons aforesaid, while upholding Section 65(105)(zzzz) of Finance Act, 1994 as amended by Section 75(5)(h) and Section 76 of the Finance Act, 2010, we hold that the provision of Section 65(105)(zzzz)introducing service tax is not attracted if (i) the vacant land is used solely for agriculture, acquaculture, farming, forestry, animal husbandry, mining purposes; (ii) it is vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (iii) land is used for educational, sports, circus, entertainment and parking purposes and; (iv) building is used solely for residential purposes and buildings are used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. The said provision levying service tax will be attracted if the immovable property is rented for the use in the course of or for furtherance of the business or commerce. 45. In view of the discussion as made above and as we find that the petitioners could not make out a case to declare Section 65(105)(zzzz) as unconstitutional or ultra vires any provisions of the Constitution, we have no option but to dismiss the writ petitions in absence of any merit. The writ petitions are accordingly dismissed. 45. In view of the discussion as made above and as we find that the petitioners could not make out a case to declare Section 65(105)(zzzz) as unconstitutional or ultra vires any provisions of the Constitution, we have no option but to dismiss the writ petitions in absence of any merit. The writ petitions are accordingly dismissed. There shall be no order as to costs." Therefore, the question of law as well basic facts involved in these writ petitions are no more res integra and covered by the decision as above. We dispose of all these writ petitions in terms of declaration of law as above in the case of Cinemax India Ltd. (supra). Rule is discharged. Interim relief if any stands vacated. No costs.