Service Tax on Renting of Immovable Property - Retrospective Amendment Stayed by the High Court

In the matter of TRENT LIMITED Versus UNION OF INDIA and Others [2010 -TMI - 76270 - HIGH COURT OF ANDHRA PRADESH], hon'ble high court of Andhra Pradesh has granted stay against the retrospective amendment to the provisions of Finance Act, 1994 for service tax on renting of immovable property. While granting stay, hon'ble high court observed that:

"The generic contentions urged on behalf of the petitioner, briefly adverted to above, are eminently arguable though we are not prima-facie satisfied to an extent warranting interdiction of the operation of the provisions of Section 65 (105) (zzzz) in so far as their prospective application is concerned. The challenge as to the retrospectivity of the provisions, in our considered view and prima-facie is on more substantial grounds."

Therefore, from the prima facie observation of the high court as above, it appears that high court did not find any substance in the argument that "levy of service tax on renting of immovable property is unconstitutional."

High Court has granted stay merely on the issue of retrospective amendment. Therefore, all the service providers should be careful as long as the prospective operation of the amendment is concerned.

Earlier, Hon'ble Delhi High Court in the matter of HOME SOLUTIONS RETAILS LTD Versus UOI AND ORS [2010 -TMI - 75874 - HIGH COURT OF DELHI] has granted stay on the issue of levy of service tax on renting of immovable property as well as on the issue of retrospective amendment to the provisions.

Also see:

HOME SOLUTION RETAIL INDIA LTD. Versus UOI & ORS. [2009 -TMI - 33136 - DELHI HIGH COURT] dated 18.04.2009 in which it was held that "renting of immovable property by itself cannot be regarded as a service."