TaxTMI 
TaxTMI 
2026 (5) TMI 1304
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....st @ 18% per annum, through Sh. Ajay Gupta, Regional Manager, India Operation, who was duly authorised to file the said Suit, vide Resolution dated 30.05.2014. 3. It was the case of the Plaintiff Company that it had entered into a Lease Deed dated 28.08.2006 with the Defendants, in respect of Property bearing 2nd Floor, SMR House, Building No.04, Basant Lok, Community Centre, Vasant Vihar, New Delhi, (hereinafter referred to as suit property), for a period of three years, at a monthly rent of Rs.1,75,000/-. The Lease was extendable for another period of three years, subject to increase of rent by 15% on the last paid rent and on execution of a fresh Registered Lease Deed, between the parties. 4. In terms of the first Lease Deed dated 28.08.2006, the Plaintiff deposited a sum of Rs. 10,50,000/- as interest free refundable security deposit, vide Cheque No.486817 dated 28.08.2006, with the Defendants, who were liable to return the same to the Plaintiff after deducting the dues, if any, at the time of handing over the vacant possession of the Suit Property. 5. The Plaintiff also paid rent for a period of six months of Rs. 10,50,000/- in advance to the Defendants, at the time o....
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....person providing services in relation to renting of immoveable property. Further, Section 67(2) of the Finance Act also provide that rent received by the Defendants, is deemed to be inclusive of service tax. 12. The Plaintiff further claimed that it had not violated any terms of the Lease Deed dated 28.08.2006 and the Defendants had no right to terminate the said Lease Deed. Further, the Legal Notice dated 24.02.2009 was in violation of the terms of Lease Deed. The Defendants were, thereafter, advised to withdraw the uncalled Legal Notice dated 24.02.2009, within a period of one week. 13. Subsequently, on expiry of the Lease Deed dated 28.08.2006 on 15.08.2009, a fresh second Lease Deed dated 07.09.2009 was executed between the Plaintiff and the Defendants, for a period of three years commencing from 16.08.2009, at a monthly rent of Rs.2,01,250/-, subject to deduction of tax as per law. There was a mutual understanding between the parties that the Plaintiff shall not be liable towards any service tax for the period prior to 07.09.2009 and all the Service Tax liability, if any, had been waived by the Defendant. It was specifically mentioned in the Lease Deed that the amount of....
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....in terms of Clause 7 of the Lease Deed dated 07.09.2009 at the rate of 10.3% per annum, without prejudice to the rights and contentions of the Plaintiff, but it is not liable to pay any interest thereon. The Defendants were requested to withdraw their uncalled Legal Notice dated 22.02.2012. 22. It was further claimed that the Plaintiff cannot be compelled to pay Service Tax for the period prior to 16.08.2009. 23. In the facts and circumstances as well as oral talks between the parties, the Plaintiff was informed that the Defendants were willing to withdraw their Legal Notice dated 22.02.2012, subject to the Plaintiff clearing the Service Tax for the period with effect from 16.08.2009 till July, 2012, amounting to Rs. 7,61,185/-, within one week of the said Legal Notice. However, it was mentioned that the said withdrawal is without prejudice to the rights of the Defendants to claim Service Tax for the period prior to August, 2009 and any interest or damages for which appropriate legal proceedings may be initiated by the Defendants. 24. The Plaintiff further claimed that in terms of the Legal Notice dated 22.02.2012, the Defendants were not claiming Service Tax for the perio....
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....wing issues on 21.07.2018: "1. Whether defendant was entitled to adjustment the security amount of the plaintiff towards service tax as alleged? OPD 2. Whether the rent paid by the defendant is inclusive of service tax? OPD 3. Whether defendant is liable to refund the service tax amount of Rs. 5,53,077/-, adjusted towards security amount? OPD 4. Whether the defendant waived off the service tax liability of the plaintiff prior to 15 August, 2009 of plaintiff is liable to pay after it? OPD 5. Whether plaintiff is entitled to recovery of suit amount as prayed? OPD 6. Whether the plaintiff is entitled for the interest over the suit amount, if so, at what rate and for what period.? OPD 7. Relief." 31. The Plaintiff examined PW-1 Mr. Ajay Gupta, Regional Manager, India Operations, who proved the requisite Documents that is Ex.PW-1/1 to PW-1/27. 32. Defendant No. 1, Mrs. Tanya Rekhi examined herself as DW-1 and deposed on similar lines, as the defence taken by her in the Written Statement. 33. The Learned District Judge after considering the rival evidence, concluded that the Service Tax was not envisioned when the pa....
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....self has admitted to what they call a mutual understanding that they would not be held liable for Service Tax. It is not being appreciated that the same was admittedly a continuation or extension of the earlier Lease Deed dated 28.08.2006 and the Defendants' Right to recover Service Tax due for the previous period, was also in continuity. The right was without seeking recourse to law, which remained intact and therefore, the Service Tax had been rightly deducted from the security deposit. 42. The Learned District Judge has also not considered that Plaintiff Company has an annual turn-over of more than 21 million USD and is a privately owned multi-level marketing Company, headquartered at 1625 Abalone Ave, Torrance, CA 90501, United States, California; involved in manufacturing and direct selling of beauty, health, food and household products. It is claimed that they entered into the second Lease Deed dated 07.09.2009, apparently to escape the liability to pay the Service Tax amounting to Rs. 12,68,277/-, against which only Rs. 5,53,077/- was paid under the Amnesty Scheme. 43. The Prayer is therefore, made that the impugned Judgement be set aside. 44. The Plaintiff/Responde....
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....at the Service Tax shall be payable by the Plaintiff. 49. Several letters were exchanged between the Parties during the period of 2008 to 2009, but the Plaintiff remained firm in denying the liability to pay Service Tax under the first Lease Deed. There was no consensus, as the Plaintiff was vehement about not being liable to pay the Service Tax. 50. Firstly, admittedly, in the first Lease Deed dated 28.08.2006, there was no covenant in the said Lease Deed imposing any liability on the Plaintiff to pay any kind of Service Tax. 51. Secondly, the Defendants have tried to justify the recovery of Service Tax under the first Lease Deed, by asserting that at the time of entering into the second Lease Deed, there was an oral understanding that the tenant would clear the previous dues. However, there is no evidence whatsoever, in regard to this alleged oral understanding. In fact, had there been any such understanding for payment of the Service Tax under the first Lease Deed, nothing prevented the parties to incorporate a Clause in this regard, in said Lease Deed. In fact, in the second Lease Deed it was categorically mentioned regarding Service Tax, but there was no mention or re....