Centre moves SC on levy of service tax on rental income

The Centre today sought the Supreme Court’s intervention in
deciding the constitutional validity of the Finance Act, 2007 that empowers the
Government to impose service tax on rental income from commercial properties.

A Bench headed by Justice B. N. Agrawal while seeking reply
from Retailers’ Association of India, Confederation of Real Estate Developers’
Associations of India and Multiplex Association of India
on the transfer petition filed by the Centre also stayed proceedings before
various High Courts.

The Centre through the Department of Revenue has sought
transfer of petitions pending before the High Courts of Bombay, Madras, Kolkata,
Punjab and Haryana and Kerala on the ground that there was a likelihood of
conflicting decisions.

According to the petition, retailers, real estate developers
and multiplex owners had filed writ petitions before various High Courts
challenging levy of service tax on leasing, letting, renting or any other
similar arrangement in respect of immovable property for use in furtherance of
business or commerce.

It further said that they had challenged the constitutional
validity of the Finance Act, 2007 on the ground that it was beyond the
legislative competence of the Union and thus Parliament cannot levy
such a tax.

(Source : Internet, 19-8-2008 —

Also widely reported in print media)