Case Law Details
HDFC Bank LTD. Vs Jagdish Lal Sharma (Supreme Court of India)
Introduction: In a recent development, the Supreme Court of India has issued an interim order staying the operation of a Delhi High Court judgment related to the imposition of service tax on renting immovable property for commercial purposes. The case, HDFC Bank Ltd. vs. Jagdish Lal Sharma, raises crucial questions about the liability for service tax in such scenarios. This article provides a detailed analysis of the Supreme Court’s decision and its potential implications.
Background of the Case: The case revolves around the imposition of service tax on the renting of immovable property for commercial purposes. HDFC Bank Ltd., the petitioner, challenged the High Court’s order that held the bank liable for the service tax, even though the service was provided by the landlord. The bank contended that it was already paying service tax on the services offered to its customers.
The High Court’s judgment relied on the precedent of Raghubir Saran Charitable Trust vs. Puma Sports India Pvt. Ltd., reported in 2013 SCC OnLine Delhi 1972. However, it is worth noting that this judgment had been challenged in the Supreme Court through Civil Appeal No. 25744-25745/2013, where leave was granted on August 26, 2023.
As an interim measure in the pending case, the appellant (tenant), HDFC Bank, was directed to furnish a bank guarantee for the sum involved, and the operation of the High Court’s judgment was stayed.
Supreme Court’s Analysis: The Supreme Court, in its interim order, considered the bank’s argument that the liability for service tax should not be imposed on the tenant (bank) but on the landlord who provided the service. The bank also highlighted that it was already paying service tax on the services it offered to its customers.
Additionally, the Court observed that the High Court had relied on the precedent of Raghubir Saran Charitable Trust, which was under challenge in the Supreme Court. This indicated a potential inconsistency in the legal position.
As an interim measure, the Supreme Court directed the appellant (HDFC Bank) to deposit the sum quantified by the High Court for the entire service tax, amounting to Rs. 27,87,374/-. The Court’s order stayed the operation of the High Court’s judgment, subject to this deposit.
Conclusion: The Supreme Court’s interim order in the case of HDFC Bank Ltd. vs. Jagdish Lal Sharma is significant, as it temporarily stays the operation of the High Court’s judgment regarding service tax on renting immovable property for commercial purposes. The case highlights the complex issue of service tax liability in such situations, and the final decision by the Supreme Court could have far-reaching implications for both tenants and landlords involved in similar transactions.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Heard learned counsel for the petitioner.
Delay condoned.
The learned counsel submits that the High Court erroneously fastened the liability towards the service tax, on renting of the immovable property for commercial purpose, upon the Bank (tenant) whereas the service actually was provided by the landlord. It is further submitted that the Bank is paying service tax on the services rendered to their customers.
It is further submitted that the High Court erred in placing reliance upon Raghubir Saran Charitable Trust vs. Puma Sports India Pvt. Ltd., reported in 2013 SCC OnLine Delhi 1972 although the said judgment was assailed in C.A. No 25744-25745/2013 where leave was granted on 26.08.2023 by this Court.
In the pending case as on interim measure, the concerned appellant (tenant) was directed to furnish bank guarantee qua the sum involved subject to which, the impugned judgment of the High Court was stayed.
Issue notice returnable in six weeks.
Subject to deposit of the sum quantified by the High Court for the entire service tax i.e. Rs.27,87,374/-, the operation of the High Court judgment is stayed.
