JASWANT SINGH MANN Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners challenge the vires of Sec. 65B(37) of Finance Act, 2012 (in short, "the Finance Act") whereby the word "person" is defined as person which includes "an association of persons or body of individuals, whether incorporated or not". Further direction has been sought to the respondents not to issue show cause notice to put the petitioners jointly within the purview of service tax in terms of definition of "person" as defined in Sec. 65B(37) of the Finance Act. Prayer has also been made for restraining the respondents from issuance of any process for levy of service tax for previous years prior to the year 2013 -14 while treating the petitioners as joint holder of the immovable property for the purpose of renting thereof. A few facts relevant for the decision of the controversy involved as narrated in the petition may be noticed. The petitioners are owners of SCO No. 341 -342, Sector 34A, Chandigarh and SCO No. 184, Sector 7C, Chandigarh in equal shares. They have let out the aforesaid premises and are receiving rent to the extent of their respective shares individually from the tenants. They have never received rent jointly from the tenants. The petitioners are holding definite shares i.e. 1/6th share each in the said property and it is so recorded in their account books and depicted in their respective ITRs individually filed by them. The petitioners were issued common notice dated 2.12.2014 under the subject "payment of service tax on renting/leasing of immovable property for commercial purposes". They were also served separately a notice dated 15.7.2015 for supply of certain documents. The petitioners supplied the information as required vide letter dated 24.7.2015 individually. The petitioners are income tax assessees and are paying income tax and filing ITRs individually as they are receiving the rent individually and are holding the above mentioned immovable property as co -owners in equal shares. The Finance Act, 2012 introduced Clause 37 of Sec. 65B where the definition of the word "person" includes "an association of persons or body of individuals whether incorporated or not". According to the petitioners, introduction of this clause causes infringement of their legal rights by making them liable for levy of service tax within the purview of Finance Act as they hold the right of ownership individually to the extent of their shares in the said immovable property though they are co -owners in equal shares. Hence the instant writ petition.

(2.) We have heard learned counsel for the petitioners.

(3.) Challenge in this petition has been made to the definition of 'person' as given in Sec. 65B(37)(vii) of the Finance Act. According to the petitioners, the above said provision is contrary to Sec. 3(42) of General Clauses Act, 1897 and Sec. 26 of the Income -tax Act, 1961, which read thus: - -