Establishments to move SC over service tax on rent

In a decision that will continue to make huge holes in the pockets of business establishments, while filling the central government’s coffers, the Bombay high court, on Thursday, dismissed more than 60 petitions challenging the Centre’s power to levy service tax on consideration paid for leasing, letting, licensing and renting immovable property for commercial purposes.

In a decision that will continue to make huge holes in the pockets of business establishments, while filling the central government’s coffers, the Bombay high court, on Thursday, dismissed more than 60 petitions challenging the Centre’s power to levy service tax on consideration paid for leasing, letting, licensing and renting immovable property for commercial purposes.

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The court was hearing several petitions by establishments like the Retailers Association of India, Phoenix Mills Ltd, FabIndia, Cinemax, Inox, Bata, Bentley and RTC restaurants among others.

With over Rs 5,000 crore collected between financial years 2007-10, the government’s decision has been backed by a division bench of justice DY Chandrachud and justice Anoop Mohta, who upheld the legislative competence of the parliament to amend the relevant act to impose such taxes.

The bench had taken into consideration some Supreme Court judgements. It has, however, stayed its verdict for four weeks for the petitioners to approach the apex court where similar petitions from around the country are pending.