2014 (2) TMI 393 - HC - Service Tax

Constitutional validity of levy of service tax on construction services - Section 65(90a) and Section 65(105)(zzzz) of the Finance Act, 1994, as amended by Finance Act, 2007 - Held that - The said issue was considered by the Full Bench of the Delhi High court in Home Solutions Retails (India) Ltd., v. Union of India 2011 (9) TMI 46 - DELHI HIGH COURT - The provisions, namely, Section 65(105)(zzzz) and Section 66 of the Finance Act, 1994 and as amended by the Finance Act, 2010, are intra vires the Constitution of India. - Decided against the assessee.

Summary

Issues:
Challenge to the impugned provisions of the Finance Act, 1994 as ultra vires the Constitution of India.

Analysis:
The writ petition sought a declaration to declare Section 65(90a) and Section 65(105)(zzzz) of the Finance Act, 1994, as amended by Finance Act, 2007, as ultra vires certain entries of the Constitution of India. The challenge was based on the provisions being ultra vires Entry 18, Entry 45, and Entry 49 of List II of Schedule VII of the Constitution of India, as well as Entry 92C read with Entry 97 of List I of Schedule VII of the Constitution of India, and Articles 268A and 265 of the Constitution of India. The court heard both sides and examined the available materials on record.

The court noted that the issue raised in the writ petition was regarding the impugned provisions, namely, Section 65(90a) and Section 65(105)(zzzz) of the Finance Act, 1994, as amended by Finance Act, 2007, being ultra vires specific constitutional provisions. The court referred to a decision by the Full Bench of the Delhi High Court in a similar case, where it was held that the provisions in question were intra vires the Constitution of India. The Full Bench decision emphasized that there is value addition when premises are let out for use in the course of business or commerce, and it overruled a previous decision that did not align with this interpretation.

Based on the precedent set by the Full Bench of the Delhi High Court, which upheld the constitutionality of the provisions in question, the court concluded that the writ petition challenging the impugned provisions should be dismissed. The court cited the decision in Home Solutions Retails (India) Ltd. v. Union of India reported in 2011 (24) S.T.R. 129 (Del.) as the basis for dismissing the writ petition. Consequently, the writ petition was dismissed, and the connected Miscellaneous Petition was also dismissed, with no costs awarded to either party.