Centre moves SC on levy of service tax on rental income

The Centre today sought the Supreme Court's intervention in deciding the constitutional validity of the Finance Act 2007 that empowers the government to impose service tax on rental income from commercial properties.    

 A bench headed by Justice B N Agrawal while seeking reply from Retailers Association of India, Confederation of Real Estate Developers' Associations of India and Multiplex Association of India on the transfer petition filed by the Centre also stayed proceedings before various high courts.     

The Centre through Department of Revenue has sought transfer of petitions pending before the high courts of Bombay, Madras, Kolkata, Punjab and Haryana and Kerala on the ground that there was a likelihood of conflicting decisions.     

According to the petition, retailers, real estate developers and multiplex owners had filed writ petitions before various high courts challenging levy of service tax on leasing, letting, renting or any other similar arrangement in respect of immovable property for use in furtherance of business or commerce.     

It further said that they had challenged the constitutional validity of the Finance Act 2007 on the ground that it was beyond the legislative competence of the Union and thus Parliament cannot levy such a tax.