In a relief to about 30-odd multiplexes in Maharashtra and over 100 members of the Retailers Association of India and Confederation of Real Estate Developers Association of India , the Bombay high court on Wednesday restrained the commissioner of Service Tax from taking coercive steps against those who have let out their premises on rent.
The Finance Act was amended last year to introduce a 12.36% service tax on renting of premises. The service tax authorities were quick to begin implementing the new law but the retailers association, Multiplexes association and developers moved the Bombay high court to challenge the imposition of service tax on rentals.
The HC asked Multiplex operators, real estate developers and retailers that, "In the event a demand of such service tax is made on them they should give a written undertaking to the court that in the event the challenge is disallowed, they shall make payment of service tax payable as per the amendment to the Finance Act in 2007. The bench headed by Justice D K Deshmukh added, "On such undertaking being filed by the members of the petitioners , no coercive steps shall be taken by the central government for recovery of service tax and the members shall not transfer its interest in the property without giving two weeks notice to the government.
Renting out premises came under the service tax net last year and the controversial amendment to the law led to various petitions being filed across five high courts by developers, landlords and a large number of shop operators especially in big malls through their lawyer Ameet Naik of Naik, Naik and Co.