Saturday, October 15, 2011

DELHI HC DISMISSES CORPORATE TENANTS' CHALLENGE TO SERVICE TAX

A division bench of Delhi High Court dismissed a large number of writ petitions challenging the constitutional validity of Section 65 (105) (zzzz) of the Finance Act, 1995 and Section 66 as amended by the Finance Act, 2010. The petitions were moved by tenant companies arguing that an "artificial liability" was imposed on them to pay service tax though the onus rested with the owners. The owners insisted upon the petitioner companies making the payment. The dispute arose due to the Finance Acts. The high court rejected the petitions, led by Home Solutions Retails (India), challenging the power of Parliament to pass a law which dealt with property. It was the state which has the power to deal with the renting of immovable property as it is a tax on lands and buildings which came within Entry 49 of List LL of the 7th of the Constitution. However in Retailers Association of India vs Union of India, SC has allowed an SLP against Bombay High Court Order on the same issue. SLP comes up for further hearing on 14th October.

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