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2008 (11) TMI 418 - HC - Service TaxWrit petition - Petitioners have taken rooms on rent from the respondent Municipality, They have been called upon to pay service tax. It is their case that the demand for service tax is illegal - According to the petitioners, under the agreement, there is no provision for payment of service tax. Therefore, the demand for payment of service tax is illegal, It is their contention that there is no authority with the Municipality to pass it on to the petitioners. He would further contend that the demand should not be sustained as it violates Article 268A, further contends that they are small tenants and the Municipality must be treated as units of the State within the meaning of Article 289. The intention behind Article 289 is that the property and income of the State should not be visited with tax. He also referred to Chapter IXA of the Constitution to contend that the Municipality is a unit of the State and, therefore, levy of service tax on the property or on the income of the Municipality is unsustainable - Held that:- Article 289 constitutes a fetter on the power of the Union to levy tax on the properly of the State or on its income. The State is an expression which is not defined in Article 366 as such. In Article 12, no doubt, State is defined as including authorities, argument rejected that when service tax is levied on the Municipality there is violation of Article 289. In fact, the Municipality has not approached this court with such a plea. There is no contention raised by the Municipality that it is in violation of Article 289, there is no merit in the said contention, Writ petitions fail and they are dismissed
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