In Brief
The Union of India leased commercial premises from Bengal Shrachi Housing Development Limited under a lease deed dated 1 September 2012. A dispute arose over liability for service tax. The lease deed stated that taxes primarily leviable on the lessor would be paid by the lessor, while taxes on the occupier would be paid by the Government. The Supreme Court held that under the Finance Act, 1994, the person primarily liable to pay service tax is the service provider (lessor), not the recipient (lessee). However, the appeal failed on facts: the Government's own sanction and approval letters expressly stated the Union would bear service charges, and relying on these representations, the judgment was not disturbed.
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