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TMI Blog2013 (6) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... 93(1) of the Finance Act, 1994. Be that as it may. As all the contentions fail, the writ petitions are liable to be dismissed - Decided against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... quot; 4. Before referring to the contentions urged, a brief survey of the relevant provisions of the Service Tax Legislation is necessary. The nature of the impugned provisions also requires to be stated. 4.1 Scheme of the Act :Chapter V of the Finance Act, 1994 relates to Service tax. Sub-Section (95) of Section 65 defines 'Service Tax' as tax leviable under the provisions of Chapter V. Section 66 provides for levy of service tax on the value of Taxable services. Taxable Services are listed in sub-Section 105 of Section 65. Section 67 provides for valuation of Taxable Services for charging service tax. Section 68(1) obligates every person providing taxable service to pay service tax. Under Section 83, several provisions of the Central Excise Act, 1944 are made applicable for collection and recovery of Service tax. The administration of Service tax is given to the authorities under the Central Excise Act. 4.2 Nature of the impugned provisions : The impugned explanations provide for a deemed definition of Taxable service by a legal fiction. The effect of the explanations is that construction of a new building or complex, which is intended for sale, wholly or partly, shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omoters v. Union of India [2011] 30 STT 268 7. I will now examine the contentions urged by the learned Counsel for the petitioners in the order in which they were urged: Re. Legislative Competence of Parliament to enact the impugned provisions: To examine the contention that the tax on the services referred to in the impugned provisions is really a tax on 'lands and buildings' specified in Entry 49 of List II (State list), the scope and ambit of Entry 49 requires to be examined. On this aspect, it is useful to refer to the following observations made by a Seven Judge Bench of the Supreme Court in India Cement Ltd. v. State of Tamil Nadu [1990] 1 SCC 12 : "23. In Asstt. Commissioner of Urban Land Tax v. Buckingham & Carnatic Co. Ltd. this Court reiterated the principles laid down in S.C. Nawn case and held that Entry 49 of List II was confined to a tax that was directly on land as a unit. In Second Gift Tax Officer, Mangalore v. D.H. Nazareth it was held that a tax on the gift of land is not a tax imposed directly on land but only on a particular user, namely, the transfer of land by way of gift. In Union of India v. H.S. Dhillon, this Court approved the principle l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the first time on the occasion of its sale...." (Emphasis Supplied) In my opinion, as stated above, the subject matter relating to the impugned provisions will not fall within the ambit of Entry 49 of List II of the Seventh Schedule of the Constitution. Nature of the levy is determined on the basis of the taxable event. By the two impugned explanations, certain services are made exigible to service tax. It is a tax with respect to the services rendered and not with respect to lands and buildings. In my opinion, an element of service is certainly involved in construction of flats and buildings. Similarly, in the context of property based services, it cannot be said that no element of service at all is involved in providing a preferential location to a buyer. Accordingly, the subject matter of the impugned provisions will fall within the ambit of Entry 92C of List I which was inserted by the Constitution (Eighty-eighth Amendment) Act, 2003 w.e.f. 19th February 2004 and in any case, it would certainly fall under the residuary entry i.e. Entry 97 of List I (Union list). I may add that even assuming that no service element is involved in providing a preferential location, clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it from the latter. The following observations made therein are relevant: "(4) It is not in dispute that taxation laws must also pass the test of Art. 14. That has been laid down recently by this Court in Kunnathat Thathunni Moopil Nair v. State of Kerala AIR 1961 SC 552. But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Art. 14. The following statement of the law in Willis on "Constitutional Law" page 587, would correctly represent the position with reference to taxing statutes under our Constitution:- "A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably ……………… The Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building after grant of completion certificate by the Competent Authority stands on the same footing as that of a building, before, during or after construction but before grant of completion certificate. Hence, it cannot be said that equals are being treated unequally or that the classification does not rest on a valid basis. The 'Completion Certificate' is the differentia which keeps apart the constructions to which the Act does not apply. I find nothing discriminatory or arbitrary in excluding completed constructions, from the purview of service tax, for which no sum is received from the prospective buyer before grant of completion certificate. The reason for exclusion appears to be that no element of service relating to the construction is involved after completion of the Construction. 9. Re. Measure of tax The contention of the learned counsel for the petitioners that the measure of tax could be only the service component and not the gross amount charged for the construction cannot be accepted. The subject of a tax is different from the measure of tax. It is a well settled position in law that the measure of tax cannot affect the nature of tax. The measure of tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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