Past service tax liability cannot be recovered from a security deposit without a contractual clause or timely enforceable claim.

Absent a contractual clause shifting past service tax liability to the tenant, a landlord cannot deduct pre-existing service tax dues from a security deposit. The first lease deed imposed no such liability on the plaintiff, and the later lease deed operated only prospectively. The text also notes that no enforceable oral understanding was shown to transfer past liability, and the attempted recovery was time-barred when the deduction was made and when suit was filed. On that basis, the deduction was treated as unjustified and refund with interest was sustained.

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Issues: Whether the defendants were entitled to deduct service tax dues for the period 01.06.2007 to 15.08.2009 from the plaintiff's security deposit under the first lease deed, and whether the plaintiff was entitled to refund of the deducted amount with interest.

Analysis: The first lease deed contained no covenant placing liability for service tax on the plaintiff, and service tax was introduced after that deed was executed. The second lease deed expressly provided for service tax liability of the lessee only prospectively, and there was no evidence of any enforceable oral understanding shifting past liability to the plaintiff. The defendants had also withdrawn their demand while reserving liberty to pursue lawful proceedings, but no such proceedings were initiated. On the date of deduction and on the date of suit, the claim for the earlier period was barred by limitation.

Conclusion: The deduction from the security deposit was not justified, and the plaintiff was entitled to refund of the deducted amount with interest.

Final Conclusion: The appeal failed, and the decree directing refund of the deducted service tax amount with interest was sustained.

Ratio Decidendi: In the absence of a contractual clause imposing past service tax liability, and where the claim to recover such amount has become time-barred, the landlord cannot appropriate the tenant's security deposit towards that demand.

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