The Bombay high court on Thursday will start dictating the judgment in a case related to the central government levying service tax payable on leasing, letting, licensing and renting of immovable properties for commercial purposes.
The court was hearing several petitions moved by establishments such as the Retailers Association of India, Phoenix Mills Ltd, FabIndia, Cinemax, Inox, Bata and RTC restaurants among others.
State government sources said the centre had started levying 12.5% of the receipt tax since January 2007.
The petitions have challenged the amendment to the finance act and the validity of service tax contending that only the state government is authorised to levy tax on land and buildings under Entry 49 of list (II) in 7th schedule of the constitution.
The central government, however, argued that the tax is not for land and buildings but was levied on renting land, buildings and so on, which is covered under residual Entry 97 of list (II) in the seventh schedule of the constitution.
The source added that the state government has not levied any such service tax, and whether they had a right to do so could not be confirmed at present.