TMI Blog2012 (10) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay service tax on rent, as alleged in the plaint? OPP 2. To what amount, if any, the plaintiff is entitled from the defendant? OPP 3. Whether the suit is barred by limitation? OPD 4. Since there was no dispute on facts, the matter was listed for final hearing and arguments have accordingly been heard. The plaintiff has filed an affidavit dated 6.10.2012 giving details of the service tax deposited by it from time-to-time in respect of the premises let out to the defendant. 5. ISSUE NO.1: The first question which comes for consideration in this case is as to whether the lease deed executed between the parties deals with the payment of service tax and if so, who under which term of the said deed is liable to pay the said tax. Clause 4(v) of the lease deed reads as under:- The municipal taxes, rates, charges and other outgoings in respect of the demised premises that would be determined/fixed/varied from time to time by the Municipal Corporation/Municipality/Gram Panchayat or any other local authority shall be paid by the Lessor or the Lessee as specified/stipulated in the schedule annexed herewith and shall keep the other party indemnified at all times agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase deed, the plaintiff agreed to let out the premises on receipt of a particular amount for rent and that amount cannot be reduced to his disadvantage by fastening the liability of service tax on it. The next contention of the learned counsel for the plaintiff was that service tax being a tax on service, it is the recipient of the service who has to bear the same and even in the absence of an agreement to this effect, the service provider can recover the amount of service tax from the recipient of the service. The learned counsel for the defendant, on the other hand, has contended that the defendant had agreed to pay a particular amount of rent for the use of the tenancy premises and the liability of the defendant cannot be increased by recovering the amount of service tax from it. 8. Vide Section 83 of Finance Act, the provisions of Section 12A and 12B of Central Excise Act have been applied in relation to service tax as they apply to excise. Section 12A of Central Excise Act provides that every person who is liable to pay duty of excise on any goods shall, at the time of clearance of the goods, prominently indicate in all the documents relating to assessment, sales invoice, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Bench of Madras High Court in All India Tax Payers Welfare Association v Union of India 2006 Law Suit (Mad) 362 where the court, after noticing the provisions of Section 83 of Finance Act2004 along with Sections 12A and 12B of Central Excise and Salt Act, inter alia, held as under:- 9. The provider of service is an assessee Under Section 65 of the Finance Act and he has to collect service tax from the users of service as contemplated Under Section 12-A and 12-B of the Central Excise Act. In this context, it is necessary to refer that Section 12-A of the Central Excise Act contemplates that notwithstanding anything contained in this Act or any other law for the time being in force, every person who is liable to pay duty of excise on any goods shall, at the time of clearance of the goods, prominently indicate in all the documents relating assessment, sales invoice, and other like documents, the amount of such duty which will form part of the price at which such goods are to be sold. Section 12-B of the Central Excise Act contemplates that every person who has paid the duty of excise on any goods under this Act shall, unless the contrary is proved by him, be deemed to have pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the relevant clauses of the lease deed in Pearey Lal Bhawan Association (supra.) Rejecting the challenge to the award, the Court, inter alia, held as under:- 6. It may also be noted that the question of the liability to pay service tax for the subsequent period from 1st April 2009 to 30th September 2011 has been referred to a separate arbitration. 18. Clause 7.1 of the lease deed reads as under: Clause 7.1 - It is agreed by and between the Parties that the Lessor shall be liable to pay property taxes and other outgoings in respect of the Premises, whatsoever payable and as levied from time to time promptly and timely, including any revisions thereto, directly to the authorities concerned and no claim for contribution towards such taxes, cesses, levies or increases shall be made by the Lessor or be entertained by the Lessee. 19. The last four lines of the above Clause state that no claim for contribution towards such taxes, cesses, levies or increases will be made by the lessor (the Petitioner) or be entertained by the lessee (the Respondent). The word such refers to property taxes and other outgoings in respect of the premises whatsoever payable and as levied fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case is concerned, Clause 7.1 of the lease deed is wide enough to include the service tax "in respect of" the premises. Merely because levy was not statutorily operative at the time of entering into the lease deed did not mean that the said liability did not attach to the Petitioner. The fact that Section 83 of the Finance Act read with Section 12A of the Central Excise Act 1944 indicates that service tax is an indirect tax which will be presumed to have been passed on to the service recipient does not decide the issue of who should in fact bear the burden. Those provisions are relevant for the assessee being the service provider and being the person, under Section 68 of the Finance Act, who has to in fact remit the tax to the government. It will be no defence for him to avoid that liability by pleading that he did not pass on the burden to the service recipient. 23. In a given case, a service provider may well decide to undertake the burden of service tax itself without passing it on to the service recipient. What the intention of the parties in that regard is can be determined only by examining the relevant clause in the agreement they execute. Even Section 64A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of job mentioned in the aforesaid contracts shall be the entire responsibility of the contractor.... 6. It is specifically understood and agreed between the parties hereto that if there is any liability towards taxes/ duties (including custom duty on foreign component of supply portion) as may be assessed/ claimed/demanded by the concerned Indian or foreign authorities, it shall be the sole responsibility/ liability of the contractor to pay all such taxes/ duties and that the owner shall not be responsible at all for the payment of such taxes/ duties. Interpreting the clauses of the contract it was held that liability to pay countervailing excise duty was of the contractor. The clauses in that contract being altogether different from Clause 4(V) of the lease deed in the case before this Court, this judgment can be of no help to the defendant. It can hardly be disputed that in a given case, the lessor may agree to bear the liability of service tax but in case before this Court, there is no such agreement between the parties. Hence, the lessor, in my view, is entitled in law to recover the same from the lessee, even if there is no agreement between the parties for pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not become barred by limitation, from the defendant. 13. ISSUE NO.3 The present suit was filed on 17.2.2012. A perusal of the affidavit filed by the plaintiff on 6.10.2012 would show that some payments were made by it between 31.3.2008 to 5.2.2009 i.e. more than 3 years before the suit was filed. Article 23 of the Limitation Act provides a limitation of three years, to be computed from the date money is paid, in a suit for money payable to the plaintiff for money paid for the defendant. Since the case of the plaintiff is that the service tax is ultimately to be borne by the defendant, the suit falls in the purview of Article 23 and not residuary Article 113 of Limitation Act. The amount of service tax paid upto 5.2.2009 therefore is clearly barred by limitation. 14. It was contended by the learned counsel for the plaintiff that since notification dated 22.5.2007 and circular dated 4.1.2008 with respect to levy of service tax were struck down by a Division Bench of this Court in WP (C) No.1659/2008 Home Solution Retail India Ltd. v. U.O.I. 2009(158) DLT 722 and the statute came be amended only by Section 76 of Finance Act 2010, though retrospectively with effect from 1.6.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment. In the case before this Court, a number of notices/letters were sent by the plaintiff to the defendant before filing this suit. These notices and letters have been specifically referred in paras 10 and 13 of the plaint. The defendant has not denied receipt of these letters and notices in the written statement. One such letter was written by the director of the plaintiff company to the defendant on 2.5.2011, whereby it was requested to pay service tax along with interest @ 13% per annum. Therefore, 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 Rs.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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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