TMI Blog2014 (5) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a writ petition was presented before the Allahabad High Court by the petitioner against Union of India and the BSNL authorities. Under the agreement, security services were to be provided to the respondent no. 2. Service tax was demanded but was denied on the ground that the same was not contemplated in the agreement. Turning to the facts of the present case, it appears that clause 6 extracted supra delineated the respective obligations of the lessor and the lessees. The parties agreed that the rates and taxes primarily leviable upon the occupier would be paid by the Government. That the respondents were not oblivious of their obligation to bear service charge is reflected from the letter dated April 30, 2012 - it is not a case that if obligation to make payment of service tax arises, the respondents would have discretion to foist the responsibility on the lessor (the first petitioner). Liability to bear service tax being that of the person receiving service, there can be no escape from the conclusion that the respondents are liable to bear service tax. The first petitioner is entitled to writs/orders in terms of prayers 'a' and 'b' extracted supra, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... went on playing the same tune by saying so in his letters dated January 15, 2013, February 11, 2013, March 12, 2013, April 1, 2013, June 11, 2013, July 24, 2013, August 22, 2013, September 24, 2013, October 24, 2013, November 25, 2013 and December 11, 2013, following the first letter dated December 11, 2012. The Government of India neither took any decision regarding payment of service tax nor did the respondents make any effort to obtain its decision and make payment in terms thereof. 3. Feeling aggrieved by the failure and/or remissness of the respondents in paying the service tax, this writ petition dated February 7, 2014 has been presented before this Court praying for, inter alia, the following relief: In the circumstances, your petitioners most humbly pray Your Lordships for the following orders:- a) A writ or writs in the nature of Mandamus do issue commanding the respondents to forthwith make payment of the service tax component of the monthly rentals in respect of the 6th floor of Premises No. CBD-1, JL 23, AAII, Newtown, Rajarhat, measuring more or less about 45605 sq. ft. super built-up area together with total 45 car parks, 20 open slots and 25 covered slots; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by Mr. Banerjee in support of his aforesaid submissions. 6. Mr. Chatterjee, learned advocate representing the respondents, objected to maintainability of the writ petition. It was his contention that even if it is assumed that it is the liability of the respondents to bear the service tax and such liability has not been discharged by not paying the service tax to the first petitioner, such action amounts to breach of contract and the remedy of the first petitioner, in terms of the said deed, is to refer the dispute(s) and difference(s) by and between the parties for resolution by arbitration. He next contended that in terms of clause 6 extracted supra, it is the lessor (the first petitioner) who is liable to pay all rates, taxes, assessment charges and other outgoings whatsoever of every description, which under the relevant statutes are primarily leviable upon the lessor and since the service tax is primarily leviable upon the service provider, being the first petitioner, the respondents as lessees are not liable to pay service tax. Referring to the letter dated April 30, 2012 on which Mr. Banerjee placed reliance, it was contended by Mr. Chatterjee that the same cannot be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside the express terms, and try to discover obligations when none exist. 13. ** ** ** ** ** ** ** ** 14. It is true, that the contracts entered into between the parties in this case, spoke of the plaintiff lessor's liability to pay municipal, local and other taxes, in at least two places. The Court, however, is not unmindful of the circumstance that service tax is a species of levy which the parties clearly did not envision, while entering into their arrangement. It is not denied that leasing, and renting premises was included as service and made exigible to service tax, by an amendment; the rate of tax to be collected, is not denied. If the overall objective of the levy-as explained by the Supreme Court, were to be taken into consideration, it is the service which is taxed, and the levy is an indirect one, which necessarily means that the user has to bear it. The rationale why this logic has to be accepted is that the ultimate consumer has contact with the user; it is from them that the levy would eventually be realized, by including the amount of tax in the cost of the service (or goods). 15. ** ** ** ** ** Although there is no explicit provision to that effect, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax etc., (if applicable) . The words if applicable in brackets follows etc. and not service tax . Therefore, it is not a case that if obligation to make payment of service tax arises, the respondents would have discretion to foist the responsibility on the lessor (the first petitioner). Liability to bear service tax being that of the person receiving service, there can be no escape from the conclusion that the respondents are liable to bear service tax. 13. The contention of Mr. Chatterjee that the lease rent was fixed @ Rs. 42/- per sq. ft. to cover all taxes and charges has not impressed me. I am inclined to be of the view that such contention has been raised as an after thought. The terms of the said deed would have been differently worded, if indeed the parties had agreed to the lease rent being fixed @ Rs. 34/- per sq. ft. 14. In the result the writ petition succeeds. The first petitioner is entitled to writs/orders in terms of prayers 'a' and 'b' extracted supra, with the only modification in regard to the rate of interest i.e. interest @ 10% instead of 18%. It is ordered accordingly. 15. On and from June 1, 2014, the lease rent shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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