Levying service tax on Tirupati shrine stayed by SC

The Supreme Court today restrained the Centre from levying service tax and taking any coercive action against the managing body of the Lord Venkateswara shrine at Tirupati in Andhra Pradesh.

A bench of justices A K Patnaik and FMI Kalifulla issued notice to Finance Ministry's Department of Revenue and sought its response within two weeks on the plea filed by Tirumala Tirupati Devasthanams, Tirupati in Andhra Pradesh challenging the constitutional validity of certain provisions of the Finance Act relating to levying of service tax on it.

"In the meantime, no coercive steps should be taken," the bench said.

Senior advocate K Parasaran and advocate Sridhar Potaraju, appearing for the managing body, sought a direction quashing a provision of the Finance Act which is said to be violative of Article 14 of the Constitution in so far as it seeks to levy tax on services provided by it to pilgrims.

"The petitioner would be canvassing that the provisions of the Finance Act, 1994 in so far as they seek to levy service tax on the petitioner are void, illegal and unconstitutional being violative of the Fundamental Rights guaranteed under Articles 25 and 26 read with Article 27 of the Constitution," the petition said.

It also claimed that it was violative of Article 14 of the Constitution and "as such void in terms of Article 13(2), unless, the provisions of the Finance Act, 1994 are so construed and read down to exclude the petitioner from levy of service tax."

Article 14 ensures equality before law. It prohibits discrimination on grounds of religion, race, caste, sex or place of birth. Article 25 provides for freedom of propagation of religion. While Article 26 allows freedom to manage religious affairs, Artcile 27 provides freedom as to payment of taxes for promotion of any particular religion.

The religious body has questioned the jurisdiction of the Finance Ministry and its agencies to apply and levy service tax under the Act as amended from May 1, 2011 on the accommodation provided by the body to piligrims visiting the holy shrine.

It said that service tax is leviable only on commercial activities as held by the apex court in another judgement and that it has been exercising the functions of a gram panchayat, and such services are not eligible to service tax.