2018 (9) TMI 1142 - AT - Service Tax

Levy of service tax - renting of immovable properties such as commercial complex, shops, lands etc. to various parties - Held that - 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 and Others 2011 (3) TMI 1554 - SUPREME COURT - 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 UTV News Ltd. 2018 (5) TMI 1367 - SUPREME COURT OF INDIA , Home Solutions Retails India Ltd. 2011 (10) TMI 13 - SUPREME COURT OF INDIA and Ritika Pvt. Ltd. 2011 (12) TMI 706 - SUPREME COURT , since the final outcome therein will have a translational impact and affect the decision in all such matters as covered in these appeals.

Summary

Issues: Taxability of amounts received for renting immovable properties under service tax, Constitutional validity of levy of service tax under Section 65(105)(zzzz) of the Finance Act, 1994.

Analysis:
1. The appeals involved a common dispute regarding the taxability of amounts received for renting immovable properties like commercial complexes, shops, and lands. The lower authorities had confirmed the demands of service tax with interest under the head Renting of Immovable Property as per Section 65(105)(zzzz) of the Finance Act, 1994, and also imposed penalties.

2. During the hearing, the appellants' counsel referred to various judgments, including one by the Hon'ble Supreme Court, questioning the legislative competence of the Union Parliament to levy service tax under Section 65(105)(zzzz) of the Finance Act. The counsel requested to defer the decisions in these appeals until the final decision of the Hon'ble Supreme Court regarding the legislative competence issue.

3. The respondents argued that judgments upholding the constitutional validity of the service tax on renting of immovable property had not been stayed by the Supreme Court, indicating no stay on future liabilities towards service tax from a certain date. They left the decision of deferring the appeals to the Bench.

4. After hearing both sides, the Tribunal noted that the Hon'ble High Court judgments on the issue had been followed consistently. While appeals against these judgments were admitted by the Supreme Court, there was no stay on their operation. The Tribunal acknowledged a recent Supreme Court order discussing the legislative competence of Parliament regarding service tax on renting immovable property.

5. The Tribunal decided to defer the appeals pending the judgment of a nine-judge Bench of the Supreme Court in a related matter. The final outcome of the Supreme Court's decision would impact all such cases, including the ones under consideration. Therefore, the Tribunal closed the files of these appeals for statistical purposes, maintaining the appeal numbers and any existing interim or stay orders. Both parties were allowed to file applications to reopen the matters based on the Supreme Court's decision or any other change in circumstances.

This detailed analysis covers the taxability of amounts received for renting immovable properties under service tax and the constitutional validity of the levy of service tax under Section 65(105)(zzzz) of the Finance Act, 1994, as discussed in the judgment by the Appellate Tribunal CESTAT CHENNAI.