LexUNION OF JNDIA & ORS. versus BENGAL SHRACHI HOUSING DEVELOPMENT LIMITED &ANR.
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---·-- [2017] 14 S.C.R. 347 UNION OF JNDIA & ORS. v. BENGAL SHRACHI HOUSING DEVELOPMENT LIMITED &ANR. (Civil Appeal No. 9952 of2017) NOVEMBER 07, 2017 [R. F. NARIMAN AND SANJAY KISHAN KAUL, JJ.] Tax/Taxation: A B Service Tax - Liability of - Appellant-Union of India (lessee) C and the Respondent (lessor) entered into a lease deed for a period of three years - Disputes and differences arose between the parties as to who was liable to pay service tax.for commercial premises ul cl. 6 of the lease deed - Letter written by Appellant-Union of India (lessee) to the respondent in which appellant expressly stated that it was liable to pay service charges - High Court held that the lessee D should be made to pay service tax - Held: u/r. 2(1)(d) of the Service Tax Rules, the person liable for paying service tax, where the service of renting immovable property is agreed to be provided by the Government, is the provider of such service - Even in a converse situation, ~hich is the situation in the facts of the present case, it is E the provider of the service alone, who is liable for paying service tax, namely the Respondent-lessor - Further, the expression "primarily leviable upon the lessor" 11/cl.6 has reference to the "taxable person", i.e. the person who is liable to pay the tax - The tax that is levied on "service" may be collected either from the service provider or the recipient of the service - The person assessed to F tax, who is primarily liable to pay the tax is, on the facts of this case, the respondents-lessor - Though in law and ulcl. 6 of the lease deed, the appellant-Union of India (lessee) is not required to service tax, however, considering the letter of appellant-Union of India wherein it has expressly stated that appellant alone will bear the service charges, discretion u/Art.136 not exercised in favour of the G appellant-Union of India - Finance Act, 1994 - ss. 65, 66, 66B, 68 - Service Tax Rules, 1994 - rr. 2(l)(d). 4. Disposing of the appeal, the Court HELD: 1. A reading of the Finance Act, 1994 and Service H 347 348 . SUPREME COURT REPORTS [2017] 14 S.C.R. A Tax Rules, 1994 makes it clear that "assessee", as defined, means the person liable to pay service tax under the Act. The present case concerns the taxable service of renting of immovable property. It is clear that under Section 66B of the Act, the levy of service tax at the rate of 12% is on the value of the service of B renting of immovable property that is provided or agreed to be provided by one person to another and collected in such manner as may be prescribed. Section 68 of the Act whose marginal note reads - "payment of service tax", makes it clear that it is the person providing the taxable service to another, who is to pay service tax at the rate specified in Section 66B, in such manner C and within such period as may be prescribed, unless otherwise specified by the Central Government. Therefore, the person liable for paying service tax is to be determined on a reading of the Rules. [Para 12][355-D-F] 2. Coming to the Rules, it is clear that under Ruic 2(l)(d), D the person liable for paying service tax, where the service of renting immovable property is agreed to be provided by the Government, is the provider of such service. Even in a converse situation, which is the situation in the facts of the present case, it is the provider of the service alone, who is liable for paying service tax namely, the respondent-lessor. [Para 13] [355-G] E The meaning to be given to the expression "primarilv leviable on the lessor" in Clause 6 of the deed of lease. 3. It is clear, on a conspectus of the authorities of this Court, that service tax is an indirect tax, meaning thereby that F the said tax can be passed on by the service provider to the recipient of the service. Being a tax on service, it is not a direct tax on the service provider but is a value added tax in the nature of a consumption tax on the activity which is by way of service. It is settled by various judgments of this Court that, in order to have conceptual clarity, the taxable event and the taxable person G arc distinct concepts. Thus, in case of Babu Ram Jagiiish Kumar & Co. v. State of Punjab this Court made it clear that, in the case of a purchase tax, the '"taxable event" is the purchase of paddy, whereas the "taxable person", who is the person liable to pay the tax, is the purchaser. In the present
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