The levy of service tax on commercial rentals of immovable properties was found to be unconstitutional in Delhi High Court last month.
On 18 April the court allowed 26 writ petitions, setting aside the tax levy and ruling that the parent law (the Finance Act, 2007) did not entitle the Indian government to levy the tax.
Alishan Naqvee, a partner at LexCounsel who represented a number of the petitioners, said that the category of “renting of immovable property service” was introduced by the Finance Act of 2007, which brought renting, letting, leasing, licensing and other similar arrangements in relation to immovable property to be used for commercial or business purposes, under the ambit of service tax from 1 June 2007.
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