Sham Lal vs. State Of Haryana & Ors

Facts

The petitioner, Sham Lal, leased vacant land at Bus Stand, Karnal, from October 4, 2011, to March 31, 2012, and for the financial year 2012-2013 for parking cycles and scooters. He deposited Rs. 1,56,000/- as refundable security. The petitioner claims to have paid all due rent and charges. He was issued a notice by the respondent department demanding service tax, which he contested, stating the service was not leviable under Section 65(105)(zzzz) of the Finance Act, 1994. After the contract period, the petitioner sought the release of his security deposit, but it was withheld. The respondents (Haryana Roadways) argued that Clause 11 of the agreement made the petitioner liable for all applicable taxes, and he failed to deposit the service tax despite requests, hence the amount was rightly withheld. The petitioner filed a writ petition seeking directions to decide his legal notices and release the security deposit with interest.

Held

The Court held that the service tax was not applicable to the petitioner for providing cycle/scooter parking services on the leased vacant land during the disputed period. This finding was primarily based on the communication from the Assistant Commissioner of Central Excise (now GST). The department clarified that the "Renting of Immovable Property Services" under Section 65(105)(zzzz) of the Finance Act, 1994, did not cover cycle parking stands in the given facts. Furthermore, the department stated that no show cause notice had ever been issued to Haryana Roadways for service tax on cycle parking, and Haryana Roadways had been self-assessing their service tax liabilities. Consequently, the retention of the petitioner's security deposit by respondents no. 2 and 3 was deemed unjustified. The Court directed the refund of the security deposit to the petitioner expeditiously, preferably within four weeks. It also ordered the release of any accrued interest on the fixed deposit where the security amount was held. The petition was allowed.

Key Issues

1. Whether the service tax was leviable on the petitioner for providing cycle/scooter parking services on the leased vacant land during the period from October 4, 2011, to March 31, 2012, and for the financial year 2012-2013, under Section 65(105)(zzzz) of the Finance Act, 1994? Petitioner's contention: The petitioner argued that the service tax was not leviable on the parking services provided, citing Section 65(105)(zzzz) of the Finance Act, 1994. Respondents' (Haryana Roadways) contention: Respondents no. 2 and 3 argued that as per Clause 11 of the agreement, the petitioner was liable for all applicable taxes, and he failed to deposit the service tax despite repeated requests, justifying the withholding of the security deposit. They relied on communications with the Central Excise Department indicating the levy of service tax on renting of immovable property for business or commerce. Respondents' (Central Excise/GST) contention: The department of Central Excise (now GST) supported the petitioner's claim, stating that service tax was not applicable to cycle parking stands in this case, as per their interpretation of "Renting of Immovable Property Services" under Section 65(105)(zzzz) of the Finance Act, 1994. They also noted that Haryana Roadways had registered and self-assessed their service tax liabilities and filed ST-3 returns, but no specific demand for service tax on cycle parking was ever raised by their office.