SC continues stay on HC order on commercial rent service tax

New Delhi, Feb 4 (PTI) The Supreme Court today maintainedits stay on a Delhi High Court order that sought to restrainthe Centre from recovering service tax on renting property forcommercial use.

A bench comprising Justices Mukundakam Sharma and A RDave said that the apex court''s interim order of January 13will continue till further orders.

The bench said the order would continue till the HighCourt takes a final decision on the matter.

The direction follows the centre''s plea, challenging theinterim order passed by the Delhi High Court on May 18, 2010.

The court had allowed the appeal of around 20 firms, includingHome Solutions Retail, and stayed the amendments made by thegovernment in the Budget 2010-11.

In the Finance Act, 2010, the government had amended thetaxing entry of "Renting of Immovable Property service",retrospective from June 1, 2007.

The High Court had observed that its earlier order,passed on April 18, 2009, had held that renting of real estatecannot be regarded as a service.

It had observed that renting of any immovable property byitself did not entail any value addition, and therefore,cannot be regarded as a service.

"Prima facie, it appears that renting of immovableproperty itself has been regarded as a service by virtue ofthe recent amendment even though this Court by virtue of thesaid decision on April 18, 2009 had categorically concludedthat renting of immovable property by itself cannot beregarded as a service," the Delhi High Court had said whilestaying the recovery.

"In the meanwhile, there shall be no recovery of Servicetax from the petitioner in respect of renting of immovableproperty alone. No such service tax would be recovered fromrespondents 5-10 in the meanwhile," it said.