The Delhi High Court in the Home Solution Retail India case had held that renting of immovable property is not a taxable service. The Government as usual filed an appeal in the Supreme Court and the whole Department is under the impression that by mere filing an appeal in the Supreme Court, the High Court order has become inoperative. So demands, threats, Show Cause Notices are playing wild games in the field. Even the TRU, by a letter dated 15.07.2009 directed the Departmental officers to either pursue the tax payers to pay up the service tax due or take necessary action to safeguard revenue as the dispute has not reached finality and the department has filed an appeal against the order of the Delhi High Court.
It is true the SLP of the Department is pending before the Supreme Court, but the Apex Court has not stayed the order of the Delhi High Court and therefore as of now, the Delhi High Court order is valid, though the Department thinks otherwise. The present position is the matter is posted for 24.02.2010 in the Supreme Court.
Some assessees have assailed the TRU instructions as well as some letters issued by some field officers, in the Delhi High Court.
The Delhi High Court observed,
“even when the judgement of this Court is challenged by filing SLP, till date there is no order passed by the Supreme Court staying the operation of that judgement. In these circumstances, the respondent could not instruct their officers to pursue the matter with tax payers calling upon them to pay service tax or to resort to other means under the law to protect the Revenue. The manner in which the letters are written clearly indicate that the payment of tax is demanded and the threat is also extended that if there is no compliance, Department would initiate further necessary action against them.”
The ASG appearing for the Government assured that corrective steps shall be taken by issuing further instructions, in supersession of earlier instructions, to the officers not to write such letters demanding the payment of service tax or threatening coercive steps.
The Court held, “on this assurance no further orders are required to be passed”.
The Registrar General of the High Court had forwarded a copy of the order on 13.01.2010, to the TRU, DGST, CBEC and Delhi Service Tax Commissioner for immediate compliance/necessar y action.