TaxTMI 
TaxTMI 
2010 (10) TMI 137
X X X X Extracts X X X X
X X X X Extracts X X X X
....endant, (hereafter "Satya Developers") in respect of an area measuring 2818 sq. ft. on the ground floor of the premises Pearey at Lal Bhawan. On 16th October, 2006, the parties entered into an Agreement for Maintenance of Common Services and Facilities in respect of the leased premises. 3. It is the common case of the parties that with effect from 1st June, 2007 the Central Government, by amending Chapter V of the Finance Act, 1994, levied service tax on the renting of immoveable property for business purposes. The plaintiff contends that the said levy tax is in the nature of an indirect tax, which has to be deposited by the service provider, after collecting the same from the user of the service. It is de-facto and de-jure a tax on the service and not a tax on the service provider. It contends that the burden of service tax has to be borne by the user of the service provider. The plaintiff relies on the Madras High Court judgment in All India Tax Payers Welfare Assn. v. Union of India reported in, - 2006 (4) S.T.R. 14; Vindhyachal Distilleries v. State of M.P. a Madhya Pradesh High Court decision, reported in - 2006 (3) STR, 723 (M.P.), Tamil Nadu Kalyana Mandapam Assn. v. Unio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot having facilities clearly incidental to the use of such vacant land; (c) land used for educational, sports, circus, entertainment and parking purposes; and (d) building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. Explanation 2.-For the purposes of this sub-clause, an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce;..." It is argued that by virtue of Section 83 of the Service Tax Act, read with Section 12-B of the Central Excise Act, there is a presumption that the levy has been collected from the user. Section 83 of the Service Tax Act reads as follows: "83. Application of certain provisions of Act 1 of 1944: The provisions of the following section of the Central Excise Act, 1944 ( 1 of 1944), as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise: - 9C, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ant contends that service tax, is a tax on property and if the plaintiff has any grievance in respect of the imposition of service tax it is open for the Plaintiff to take up the matter in the appropriate forum with the Central Government. The defendant argues that contractual clauses have to be plainly read by the Court, and no attempt to supply meanings other than the expressions used, and the context visualized, can be resorted to by the Court. Reliance is placed on the judgment of the Supreme Court in State of Gujarat (Commissioner of Sales Tax, Ahmedabad) v. Variety Body Builders, AIR 1976 SC 2108 where the Court held that: "8. It is well settled that when there is a written contract it will be necessary for the court is find out therefrom the intention of the parties executing the particular contract. That intention has to be primarily gathered from the term and conditions which are agreed upon by the parties. We will therefore immediately turn our attention to the agreement in question. Modi Co. v. Union of India, AIR 1969 SC 9, another decision of the Supreme Court is also relied on by the defendants, to urge that the Court should only consider the intention of the parti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....activities such as management, banking insurance, hospitality, consultancy, communication, administration, entertainment, research and development activities forming part of retailing sector. Service sector is today occupying the centre stage of the Indian economy. It has become an Industry by itself. In the contemporary world, development of service sector has become synonymous with the advancement of the economy. Economics hold the view that there is no distinction between the consumption of goods and consumption of services as both satisfy the human needs. In late seventies, Government of India initiated an exercise to explore alternative revenue sources due to resource constraints. The primary sources of revenue are direct and indirect taxes. Central excise duty is a tax on the goods produced in India whereas customs duty is the tax on imports. The word "goods" has to be understood in contradistinction to the word "services". Customs and excise duty constitute two major sources of indirect taxes in India. Both are consumption specific in the sense that they do not constitute a charge on the business but on the client..." Similarly, in All India Taxpayers Welfare Associati....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of levy which the parties clearly did not envision, while entering into their arrangement. It is not denied that leasing, and renting premises was included as a "service" and made exigible to service tax, by an amendment; the rate of tax to be collected, is not denied. If the overall objective of the levy - as explained by the Supreme Court, were to be taken into consideration, it is the service which is taxed, and the levy is an indirect one, which necessarily means that the user has to bear it. The rationale why this logic has to be accepted is that the ultimate consumer has contact with the user; it is from them that the levy would eventually be realized, by including the amount of tax in the cost of the service (or goods). 15. It would be noteworthy to recollect Section 64-A of the Sale of Goods Act, 1930, which visualizes and provides for situations where levies of tax are imposed after the contract (for sale of goods) is entered into. The provision prescribes that: "64-A. In contracts of sale, amount of increased or decreased taxes to be added or deducted. - (1) Unless a different intention appears from the terms of the contract, in the event of any tax of the nature d....