K.M. BUILDING TENANTS ASSOCIATION Vs. KUTHUPARAMBA MUNICIPALITY

JUDGEMENT

(1.) Heard counsel for the appellants/petitioners. Challenge in the Writ Appeals and the Writ Petitions is against the constitutional validity of S. 65(105)(zzzz) and S. 66 of the Finance Act, 1994 as amended by Finance Act, 2010 providing for levy of service tax on renting of immovable property service.

(2.) Standing Counsel, Sri John Varghese appearing for respondents submits that the issue is covered by Full Bench decision of the Delhi High Court upholding the validity of the amendment made in 2010. However, counsel appearing for the appellants/petitioners produced order in Special Leave Petition No. 27637/2011 wherein the Hon'ble Supreme Court has granted leave and passed an interim order staying collection of service tax on rental arrangement service until 30th September 2011. The interim order passed by the Hon'ble Supreme Court gives freedom to the department to collect service tax from 1st October, 2011 onwards. Therefore, we dispose of the Writ Appeals and Writ Petitions by upholding the amendments to Finance Act, 1994 based on the Full Bench judgment of the Delhi High Court Home Solutions Retails (India) Ltd. v. Union of India and Others, 2011 24 STR 129. However, following the orders of the Hon'ble Supreme Court in the S.L.P. referred above, there will be a direction to the appellants/petitioners to remit tax from 1st October, 2011 onwards subject to the result of judgment of the Hon'ble Supreme Court in the SLP pending before it. We do not think there is any need for each and every party to approach the Hon'ble Supreme Court to get the benefit of the judgment of the Hon'ble Supreme Court, because decision on constitutional validity will apply to all. This judgment will therefore be subject to the result of the judgment of the Hon'ble Supreme Court in the above C.A. pending before it. The appellants/petitioners are free to avail the benefit of the judgment of the Hon'ble Supreme Court in the above stated cases as and when judgment is pronounced. The Writ Appeals and the Writ Petitions are disposed of accordingly with the following further directions. Whatever amount is collected and withheld by the Municipality for any period prior to 30th September, 2011 should be paid to the appellants/petitioners. Recovery of arrears in all these cases up to 30th September, 2011 will remain stayed until judgment of the Hon'ble Supreme Court and thereafter based on such judgment. Whoever has paid tax can claim refund, if eligible, after and based on the judgment of the Hon'ble Supreme Court. If service tax is not paid from 1st October, 2011, it can be recovered by coercive steps but will be subject to judgment of the Hon'ble Supreme Court.