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2023 (5) TMI 723 - HC - Service Tax


Issues involved: Interpretation of lease agreement terms regarding payment of service tax, liability of service tax payment, obligation of lessor and lessee, applicability of judgments on service tax liability.

Summary:

Interpretation of Lease Agreement Terms:
The petitioner, as the owner of a building leased to LIC, claimed that the service tax liability rested with LIC. However, LIC argued that the lease terms obligated the petitioner to pay all applicable taxes, including service tax.

Liability of Service Tax Payment:
The High Court analyzed the lease agreement clauses and determined that the petitioner was not obliged to pay service tax, as it is a tax on services availed, not on the property. The Court emphasized that the lease terms did not explicitly require the landlord to pay service tax.

Obligation of Lessor and Lessee:
Referring to a Supreme Court judgment, the Court clarified that while the lessor is liable to pay service tax, they can pass on this liability to the lessee. Therefore, the lessor, in this case, was responsible for collecting and remitting the service tax to the Department.

Applicability of Judgments on Service Tax Liability:
The Court rejected LIC's argument that it was not liable to pay service tax, emphasizing that LIC had been paying the tax since November 2017. The Court directed LIC to reimburse the service tax, interest, penalty, and late fee paid by the petitioner within one month.

This judgment highlights the importance of interpreting lease terms accurately in determining the responsibility for paying service tax and reaffirms the obligation of lessors to collect and remit service tax to the authorities.

 

 

 

 

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