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2018 (7) TMI 2361 - AT - Service TaxTaxability on amounts received by the appellants towards renting of immovable properties such as commercial complex shops lands etc. to various parties - HELD THAT - Discernibly the Hon ble Supreme Court has found it proper to defer decisions in these matters awaiting the judgment of the nine Judge Bench in MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS 2011 (3) TMI 1554 - SUPREME COURT . Viewed in this light it is opined that in the interests of justice all these appeals should be kept in abeyance pending the decision of the Hon ble Supreme Court in all the three cases referred to supra namely UNION OF INDIA AND ORS. VERSUS UTV NEWS LTD. 2018 (5) TMI 1367 - SUPREME COURT HOME SOLUTIONS RETAILS INDIA LTD. VERSUS UOI AND ORS. 2011 (10) TMI 13 - SC ORDER since the final outcome therein will have a translational impact and affect the decision in all such matters as covered in these appeals. Conclusion - This Court would not proceed with the appeals until the Supreme Court resolves the legislative competence issue. Appeal disposed off.
ISSUES PRESENTED and CONSIDERED
The core legal issue considered in this judgment is the taxability of amounts received from renting immovable properties under the "Renting of Immovable Property" service as defined in Section 65(105)(zzzz) of the Finance Act, 1994. The Tribunal examined whether the levy of service tax on such renting activities falls within the legislative competence of the Union Parliament, a question that is pending before a nine-judge bench of the Supreme Court. The Tribunal also considered whether to defer the appeals until the Supreme Court delivers its decision on the legislative competence issue. ISSUE-WISE DETAILED ANALYSIS 1. Legislative Competence of Levying Service Tax on Renting of Immovable Property Relevant Legal Framework and Precedents: The matter revolves around the interpretation of Section 65(105)(zzzz) of the Finance Act, 1994, which imposes service tax on renting of immovable property. Key precedents include the Supreme Court's pending decision in Mineral Area Development Authority and Others vs. Steel Authority of India Ltd., which addresses the legislative competence of the Union Parliament concerning taxes on lands and buildings under Entry 49 of List II of the Seventh Schedule to the Constitution. Court's Interpretation and Reasoning: The Tribunal noted that the Supreme Court, in its order dated 5.4.2018, acknowledged the pending issue of legislative competence and decided to defer its decision until the nine-judge bench resolves the matter. The Tribunal emphasized that the outcome of the Supreme Court's decision would have a significant impact on the appeals before it. Key Evidence and Findings: The Tribunal referenced the Supreme Court's order in UTV News Ltd., which highlighted the issue of whether service tax on renting of immovable property is within the legislative competence of the Union Parliament. The Tribunal also noted that the Delhi High Court's judgments in Home Solutions Retails India Ltd. and Ritika Pvt. Ltd., which upheld the constitutional validity of the service tax, have been appealed to the Supreme Court but not stayed. Application of Law to Facts: The Tribunal applied the legal framework and precedents by recognizing the ongoing judicial consideration of the legislative competence issue. It concluded that it would be prudent to await the Supreme Court's decision before proceeding with the appeals. Treatment of Competing Arguments: The Tribunal considered the appellants' argument for deferring the appeals and the respondent's position that there is no stay on the Delhi High Court's judgments. The Tribunal balanced these positions by deciding to keep the appeals in abeyance, acknowledging the potential impact of the Supreme Court's pending decision. Conclusions: The Tribunal concluded that it is appropriate to defer the appeals until the Supreme Court resolves the legislative competence issue. This decision ensures that the Tribunal's judgments align with the Supreme Court's eventual ruling, thereby maintaining judicial consistency. SIGNIFICANT HOLDINGS The Tribunal held that all appeals concerning the taxability of renting immovable properties should be kept in abeyance pending the Supreme Court's decision on the legislative competence issue. The Tribunal emphasized the importance of awaiting the Supreme Court's judgment, as it would have a "translational impact" on the appeals. The Tribunal ordered the closure of the appeal files for statistical purposes, while maintaining the assigned appeal numbers and any interim orders. Both parties were granted the liberty to apply for reopening the matters following the Supreme Court's decision or any change in circumstances. Core Principles Established: The Tribunal established the principle that judicial proceedings should be deferred when a higher court is considering a related fundamental legal question that could affect the outcome of the cases at hand. This approach ensures that lower courts' decisions are consistent with the higher court's authoritative interpretation. Final Determinations on Each Issue: The Tribunal determined that it would not proceed with the appeals until the Supreme Court resolves the legislative competence issue. The appeals were disposed of as closed for statistical purposes, with the possibility of reopening based on the Supreme Court's decision or new developments.
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