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2013 (6) TMI 587 - HC - Service TaxRenting of immovable property - levy of service tax - dispute between landlord and tenant - tenant refused to pay as per the terms of contract - Held that:- The most crucial aspect which is material for decision of the present case, as noticed by us, is that service tax is neither a property tax nor an outgoing in respect of the premises; it is on the commercial activity carried on. The two expressions property tax and outgoings in respect of the premises are in fact of a common species. Clause 7.1 thus only deals with taxes which are relatable to the property and not the activity carried out in the premises, which is on what service tax is levied. As service tax on commercial rented properties is an indirect tax and the jurisprudence on indirect tax tells us that the primary liability of the landlord to pay the tax to the Income Tax Authorities can be passed on to the tenant which enhances the utility to the tenant with respect to the property which attracts service tax on commercial properties. Tenant has to bear the incidence of the service tax and not the landlord. There is no dispute about the quantum of the amount of service tax which already stands paid by the appellant which is ₹ 37,42,954/- and ₹ 48,27,777/- in the two appeals respectively which will now thus have to be paid by the respondent to the appellant. Since the premises were vacated on 30.09.2011, we consider it appropriate to grant interest from 01.10.2011 till date of payment at the rate of 9% per annum simple interest.
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