Center is eligible to levy tax on renting of immovable property: HC

Mumbai: Bombay High Court has rejected the writ petitions filed by the Retailer’s Association of India with the mutual consent of the Confederation of Real Estate Developers’ Association of India and Multiplex Association of India, upheld the constitutional validity of levy of service tax on renting of immovable property with its retrospective amendment. Whereas, to enable the petitioners to move the Supreme Court implementation on the order has been deterred for forthcoming four weeks.
According to the Justice D Y Chandrchud said that renting of land and building is comes under the “service” so center is liable to claim tax on these transactions.
The aftermath of service tax provisions proceedings being filed in Delhi High Court, even in the 2008, in 2007 first amendment has been made according to the amendment “services” is having only concern with the renting on immovable property. However according to the Delhi HC in 2009 has held that center is not liable to levy service tax on renting immovable property as it doesnt comes under value-added service. After proposing this law center had quickly came out with the new amendment to explain that tax was on renting the commercial property.
According to the developers that tax department is misguiding that renting commercial property is taxable service, with the concern of renting of immovable property under section 65(105) of the finance Act. Developers argued that there is no service involved in renting immovable property, but HC upholds order that service involved. Bench of Justice headed by the DY Chandrachud and Anoop Mehta held that center did have power to levy such a tax and did not encroach upon the powers of the state government, as contended by the petitioners.