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2012 (10) TMI 685 - HC - Service TaxService tax on the lease rent - period June, 2007 to January, 2012 - liability to pay service tax is on whether lessor or lessee? - Held that:- Since the lease deed having been executed on 9.6.2004 and the service tax having been levied retrospectively with effect from 1.6.2007, it is obvious that the payment of service tax could not have been in contemplation of the parties at the time this deed was executed. Therefore, there could have been no agreement between the parties specifically with respect to payment of service tax. Admittedly, service tax is neither a municipal tax nor a charge, this being a tax on services levied by Union of India. As it can hardly be disputed that in a given case, the lessor may agree to bear the liability of service tax the right of the service provider to recover the amount of service tax from the recipient of the service, in a case where there is no contract between the parties as to who has to ultimately meet this statutory liability. For the reasons stated hereinabove, the plaintiff(lessor) is entitled to recover service tax, to the extent the liability has not become barred by limitation, from the defendant. Whether the suit is barred by limitation? - Held that:- Section 9 of the Limitation Act expressly provides that where once time has begun to run, no subsequent disability or inability to institute a suit or make an application stops it. The period of limitation for the deposits made between 31.3.2008 to 5.2.2009 commenced on the date the deposits were made. Since there can be no stopping of the limitation, once it begins to run, the suit having been filed on 17.2.2012 is clearly barred by limitation with respect to service tax deposited between 31.3.2008 to 5.2.2009. What amount the plaintiff is entitled from the defendant? - Held that:- Interest on the amount which had become due by 2.5.2011 can be awarded to the plaintiff under Section 3 of The Interest Act 1978. No notice/letter demanding interest was issued after 02.05.2011. Hence, no interest can be granted with respect to amounts deposited thereafter. A perusal of the affidavit filed by the plaintiff shows that it had deposited ₹ 3,45,049/- towards service tax between 05.03.2009 to 02.05.2011. Rest of the deposits were made after sending the letter dated 02.05.2011 and interest was not claimed in any of those letters and notices. In my view, it would be appropriate to award interest to the plaintiff @ 6% per annum on the aforesaid amount. The amount of interest calculated @ 6% per annum with effect from 2.5.2011 till filing of the suit on 17.2.2012 comes to ₹ 16,389.83. Thus, the plaintiff is entitled to recover principal sum of ₹ 9,74,922/- and ₹ 16,389.83, as interest from the defendant.
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