Immovable Property and Taxation : Important Decisions

 Immovable Property and Taxation : Important Decisions

Here are some important decisions that deal with issue of service tax for renting of immovable properties under Indian taxation regime before CGST Act, 2017 came into force.

1. M/s Shubh Timb Steels Limited v UOI [2010] GCtR 5961 (P&H) : "It cannot be held that renting of property did not involve any service as service could only be in relation to property and not by renting of property. Renting of property for commercial purposes is certainly a service and has value for the service receiver."

2. HOME SOLUTIONS RETAILS LTD. v UOI [2011] GCtR 5962 (Delhi) : In this case, Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994 as amended by the Finance Act, 2007, Finance Act 2008 and Finance Act, 2010 were sought to be declared as ultra vires the Constitution of India as there is colourable exercise of power inasmuch as the Legislature does not have the legislative competence in this field as it basically pertains to List II of the Seventh Schedule of the Constitution of India. The petition was dismissed.

3. Retailers Association of India (RAI) v UOI [2011] GCtR 5963 (Bombay): "The notes on clauses when the Finance Bill of 2007 was introduced in Parliament would indicate that the intent of Parliament was specifically to bring the renting of immovable property within the fold of taxable services when used in course or furtherance of business or commerce."

4. N.K. Bhasin v Union of India [2017] GCtR 5964 (Lucknow, Allahabad) : Court has negatived the arguments that service tax on service of renting of property is exclusively covered by Entry 49 List II of Constitution of India and therefore, argument of lack of legislative competence has also been negatived.