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2015 (4) TMI 497 - KERALA HIGH COURT

2015 (4) TMI 497 - KERALA HIGH COURT - 2015 (40) S.T.R. 438 (Ker.) , [2016] 87 VST 30 (Ker) - Renting of immovable property services - Jurisdiction of central government to levy service tax - Petitioner being Department of State Government discharge sovereign functions - Held that:- by virtue of Entry 35 read with Entry 18 List II of the Constitution of India, leasing of property is a subject under the State List, and therefore, only the State legislature would have the power to legislate in res .....

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ompetence of the Parliament to legislate in respect of service tax on renting of immovable property services cannot be called in question.

Thus, as far as the applicability of the Finance Act, 1994, as amended is concerned, it would apply even in respect of services rendered by a State Government, unless the services fall under the negative list of services under the Statute. Thus, in the instant case, there is no ground to infer that, in passing Ext.P7 order, the respondents were act .....

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is against Ext.P7 order of assessment, passed by the 2nd respondent, confirming a demand of service tax and penalty on the petitioner, which is a department of the State Government. The main ground of challenge against Ext.P7 order of the 2nd respondent, is with regard to the jurisdiction of the 2nd respondent to pass the said order. It is pointed out that, the petitioner, being a department of the State Government, cannot be subjected to the levy of service tax in as much as the services rende .....

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nasmuch as the activity of leasing out property and receiving rent, in the instant case, is an administrative function envisaged under List II of the 7th Schedule read with Article 246, the levy of service tax as contemplated under the Finance Act,1994, as amended, cannot be made applicable to the services rendered by the State Government. It is further pointed out that, the levy of service tax is on services rendered by one person to another and, in the instant case, the State Government cannot .....

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ricultural Wholesale Markets, the said transaction would be immune from central taxation. It is based on the above contentions, that the learned Government Pleader, for the petitioner, would submit that the petitioner cannot be relegated to the alternate remedy of preferring any appeal against Ext.P7 order since, the very jurisdiction of the respondents to subject the activities of the petitioners to tax under the Finance Act, 1994, is called in question, in the present writ petition. 2. I have .....

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the contention of the petitioner that, by virtue of Entry 35 read with Entry 18 List II of the Constitution of India, leasing of property is a subject under the State List, and therefore, only the State legislature would have the power to legislate in respect of the said subject, I note that the said entries do not deal specifically with levy of a tax on renting of immovable property services. It is not in dispute that the legislative sanction for the levy of a service tax on renting of immovabl .....

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f the Finance Act, 1994, as amended, I note that, as per the specific provisions of Section 65(B)(37) of the Finance Act,1994, as amended, the word "person" is defined as including, inter alia, "Government". Thus, as far as the applicability of the Finance Act, 1994, as amended is concerned, it would apply even in respect of services rendered by a State Government, unless the services fall under the negative list of services under the Statute. Thus, in the instant case, there .....

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