Service Tax -Renting - Latest From Delhi High Court

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From: Rebecca Andrews rebecca.andrews88@yahoo.in

NEXT DATE OF HEARING : 25th Jan. 2011  Delhi High Court Lobs Matter Back To Supreme Court As per briefing received by me from my senior who attended the Court on 14th Dec.,  DHC after hearing detailed arguments from Mr. Harish Salve, Sr. Advocate and Mr. Chandihok, ASG,(with brief intervention by Mr. Ganesh)  accepted the suggestion emanating from the Bar that the matter needed to go back to Supreme Court for further directions, in view of the handicap arising out of the previous final order in the case of Home Retail Solutions Ltd. (HRSL)  pronounced on 18-4-2009. That order was from a co-ordinate bench of the same High Court. The present and the previous bench were both double bench. It is not as if the present bench is a larger bench. Moreover, nothing has changed on the facts of the case in so far as the phrase "in relation to renting" is concerned, except for a validation provision. Para 35 of the old order proved a stumbling block and the Chief Justice  Dipak Misra and Justice Manmohan found it difficult to surmount the findings contained in this para, inspite of  a plea made by ASG that these were mere observations, and therefore not much importance can be attached.  Further, in any case, that was not the issue before the earlier Bench.  This proposition was contested by Harish Salve in view of the wordings contained in the subsequent SLP filed by the UOI itself before SC. This also found favour with the Bench who was categorical that reasoning contained therein was germane to the whole issue under discussion, and not just obiter-dicta. Then there was also the issue of the final order passed by P&H High Court on 22.11.2010. Chief Justice declined to be drawn into discussion on it, stating that it, at best had a persuasive value and could not take the shape of a binding precedent. ASG was queried whether he had any arguments to support the view that the final order of DHC of April, 2009, should not be regarded as a binding precedent for another co-ordinate bench in the same HC. He put up a vehement defence, responded to the points raised,  but the Bench seemed unconvinced. Harish Salve was quite scathing in criticism about the quality and the reasoning of this judgement (or rather lack of it). There were suppressed smiles all over about this P&H judgement, and the the unspoken sentiment in the Court was that the P&H High Court could have done better, even if it wanted to arrive at the same conclusion.  This order was rich in citations and quotes, and somehow deflated when it came to the discussion and reasoning part of it. The significant omission was the soul itself of the case - as was discussed in para 34 & 35 of the HRSL final order. The Kesoram citation contained in P&H Order too was felt to have been further overshadowed by later SC judgements on the same issue such as Goodricke and of Ashok Kumar. But most applicable to the facts of the case was felt to be the SC judgement on Luxury Tax, where the slant was more in favour of the states on residue matters, rather than in favour of the Center.   Haste makes waste, was the predominant expression about P&H final order in the Court yesterday. Points for consideration : Now whether the matter be referred to a larger bench to obviate the handicap ? Whether to let Supreme Court decide the matter straightaway, as an SLP has already been filed by trade against P&H order ? Additionally, the main issue under challenge is still before the SC by an SLP filed by UOI in 2009, which has yet to be considered by it. Or whether the SC be requested to recall cases pending all over India, and have it decided expeditiously by itself or by remand to any one HC.  The Bar from both sides agreed that they will make a mention to SC at the first available opportunity. These now need to be made in writing.  As the directions from Supreme Court may take some time to be communicated, the Delhi High Court fixed the next date of hearing as 25.01.2011. Till such time, the ad-interim stay orders shall continue.  This order shall be posted on the net shortly. Question now is whether we can see resolution of this uncertainity in the current FY ? Looks unlikely. Kind regards, Rebecca Andrews Kind regards, Rebecca Andrews