In Brief
This case concerns the liability for service tax under a lease deed between the Union of India (lessee) and Bengal Shrachi Housing Development Limited (lessor). The lease clause stated that rates and taxes "primarily leviable" on the occupier would be paid by the Government. The Court held that under the Finance Act, 1994 and Service Tax Rules, the service provider (lessor) is the taxable person primarily liable for service tax on renting of immovable property, even though service tax is economically an indirect tax. However, the Court dismissed the appeal on facts, as the Union had expressly undertaken to bear the service charges in its sanction and subsequent letters.
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