UTKAL BUILDERS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This writ application has been filed by the Petitioner company M/s. Utkal Builders Limited with the following prayer:

(2.) Mr. M. Kanungo, Learned Counsel appearing for the Petitioner, placed reliance upon the judgment rendered by the Hon'ble High Court of Delhi dated 18-4-2009 passed in WP(C) No. 1659 of 2008 in the case ofHome Solution Retail India ltd. v. Union of India and Ors., 2009 14 STR 433 wherein the Hon'ble High Court of Delhi, declared that the provisions of Section 65(105) (zzzz) of the Finance Act, 1994 does not in terms entail that the renting out of immovable property for use in the course or furtherance of business of commerce would by itself constitute a taxable service and be exigible to service tax under the said Act. As a consequence of the aforesaid finding and the interpretation placed thereon, the impugned notification dated 22-5-2007 and circular dated 4-1-2008 were held to be incorrect and consequently, ultra vires the said Act and set aside.

(3.) The essential contention of Mr. Kanungo on behalf of the Petitioner was that a distinction has to be made between "property based service" and "performance based service" as well. There can be no doubt that any service connected with "renting" of immovable property would fall within the ambit of Section 65(105)(zzzz) of the Finance Act and is assessable to the service tax. Yet, the question whether "renting of such immovable property" by itself constitute a taxable service or not, especially when there has been no value addition provided by the service provider, i.e. landlord or lesser is raised. It is claimed by the Petitioner that insofar as "renting of immovable property for use in the course or furtherance of business of commerce" is concerned, there is no distinct able value addition necessary and consequently, "renting of immovable property for use in the course or furtherance of business of commerce" by itself does not entail any value addition and, therefore, cannot be recorded as service.