2014 (9) TMI 968 - HC - Service Tax

Recover of service tax from service receiver - Held that - Admittedly, the properties in question do not fall within the two exemptions provided under Section 65(90a) of the Act. Explanation 2 under Section 65(90a) makes it more clear that renting of immovable property includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property. The duty performed by the first respondent Municipality would clearly fall within the ambit of the provisions referred above and therefore they have been remitting Service Tax to the Department. Further, Section 66D(a)(iv) of the Act deals with negative list of services and Clause (a) provides services by Government or a local authority excluding the following services to the extent they are not covered elsewhere and the relevant clause would be Clause (iv) namely support services, other than services covered under Clauses (i) to (iii), provided to business entities. Therefore, the Municipality is bound to pay Service Tax on the nature of transaction, which they have entered into with the petitioner. - Decision in the case of 2015 (3) TMI 391 - MADRAS HIGH COURT followed - petitioner is not the service provider and he has not challenged the power of the second respondent to levy and demand Service Tax and the first respondent Municipality being the service provider is bound to pay the Service Tax, which has been remitted. In the light of the above findings, no grounds have been made out by the petitioner to interfere with the impugned proceedings. - Decided against Assessee.

Issues Involved:
1. Jurisdiction of the Municipality to demand Service Tax.
2. Applicability of Service Tax on the licenses granted for parking spaces.
3. Maintainability of a single writ petition challenging multiple demand notices.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Municipality to Demand Service Tax:
The petitioner challenged the jurisdiction of the first respondent Municipality to demand Service Tax, arguing that the Finance Act, 1994 does not provide for the levy of Service Tax on licensees granted licenses for parking places. The petitioner's counsel argued that the respondents have no authority to levy Service Tax on the license granted to the petitioner, making the demand without jurisdiction. The court analyzed Section 65(105)(zzzz) and Section 65(90a) of the Act, which define taxable services and renting of immovable property, respectively. The court concluded that the Municipality is the service provider registered with the Department and is responsible for remitting Service Tax. The petitioner, being a licensee, is not the service provider and has not challenged the validity of the Finance Act or the notifications issued by the second respondent. Therefore, the challenge to the demand notice issued by the service provider fails.

2. Applicability of Service Tax on the Licenses Granted for Parking Spaces:
The court examined whether the services provided by the Municipality fall within the definition of taxable services under the Finance Act. The court noted that renting of immovable property, including licensing, for use in the course of business or commerce, is taxable. The properties in question do not fall within the exemptions provided under Section 65(90a). The court referred to previous judgments, including the Full Bench decision of the Delhi High Court in Home Solutions-II, which upheld the validity of the provisions imposing Service Tax on renting of immovable property. The court concluded that the services provided by the Municipality are taxable, and the Municipality is bound to pay Service Tax on the nature of the transaction entered into with the petitioner.

3. Maintainability of a Single Writ Petition Challenging Multiple Demand Notices:
The petitioner filed a single writ petition challenging four demand notices issued by the Municipality. The court raised a preliminary objection regarding the maintainability of a single writ petition for multiple demands. The court noted that the petitioner ought to have filed separate writ petitions for each demand as they pertain to independent licenses. However, the court proceeded to hear the petition on merits due to the legal issues involved. Ultimately, the court dismissed the writ petition, stating that no grounds were made out to interfere with the impugned proceedings.

Conclusion:
The writ petition was dismissed, and the petitioner was directed to comply with the Service Tax demands issued by the Municipality. The court emphasized that the petitioner is not the service provider and has not challenged the power of the second respondent to levy and demand Service Tax. Consequently, the connected miscellaneous petitions were closed, and no costs were awarded.

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