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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY PETITION NO. 350 OF 2012
Hindustan Dorr Oliver Ltd., A Company ) ... Petitioners.
duly registered under the Companies )
Act, 1956 and having its registered office )
at Dorr-Oliver House Chakala, Andheri (E)
Mumbai -400 099. )
V/s.
Jet Airways (India) Limited ) ... Respondent.
A Company incorporated under the )
Companies Act, 1956 and having its )
registered office at "Siroya Centre", )
Sahar Airport Road, Andheri (E). )
Mumbai -400 099 )
---
Mr. Niranjan Vaghela i/by M/s. Pandya & Co. for the
Petitioners.
Mr. E.P. Bharucha, Sr. Counsel a/with Ms. Sheetal Sabnis, Ms.
I.Sen i/by Gagrats for the Respondents.
---
CORAM : ANOOP V. MOHTA, J.
DATE : 01ST NOVEMBER, 2012
ORAL JUDGMENT :
1 Heard finally by consent.
2 The Petitioner, the owner of the commercial premises
which were let out to the Respondent Company, the Licensor, has invoked Sections 433(e) & 434 of the Companies Act, 1956 ::: Downloaded on - 09/06/2013 19:21:03 ::: spb/ 17cp350-12.sxw (for short, the Companies Act) basically on the ground that the Respondent Company not cleared the service tax liability.
3 We have dealt with the aspect of service tax on renting in the case of Retailers Association of India (RAI) vs. Union of India & Ors.,1 where a Notification was issued on 22nd May, 2007 which was followed by a circular dated 4 th January, 2008 of the Ministry of Finance in the Union Government. In para 3 it is observed thus :
"3. Following the decision of the Delhi High Court, the Finance Act, 2010 substituted the provisions of sub-clause (zzzz) with effect from 1 June, 2007. As amended, the provision now stipulates that the expression taxable service means any service provided or to be provided :
'To any person, by any other person, by renting of immovable property or any other service in relation to such renting, for use in the course or for furtherance of, business or commerce."
The challenge in this batch of Petitions before the Court is to the constitutional validity 1 2011 (5) Mh.L.J. 660 ::: Downloaded on - 09/06/2013 19:21:03 ::: spb/ 17cp350-12.sxw of the imposition of a service tax under sub- clause (zzzz) of clause (105) of section 65 read with section 66 of the Finance Act of 1994 as amended."
The service tax is indirect tax. It is made retrospectively applicable to the commercially rented / licensed premises.
The basic liability is of the service provider, the owner, unless agreed otherwise.
4 The Petitioners and Respondent entered into a leave and licence agreement on 22nd December, 2006 for the premises for a period of five years. The relevant terms of the agreement are as under :
"1. That the License Fee payable for the balance period of the lock in including notice period of 3 months (namely from 1st July 2009 to 31st January 2010) at the rate of Rs. 14,75,000/- (Rupees Fourteen Lakhs Seventy Five Thousand only) per month by "JET" to "HDO" will be adjusted by "HDO" against the interest free Security Deposit of Rs.88,50,000/-(Rupees Eighty Eight Lakhs Fifty Thousand only) furnished by "JET" to "HDO" at the time of signing the Agreement;
6. "JET" shall claim no compensation against "HDO" for its voluntarily surrendering the "Licensed Premises" before the expiry of its term in terms of the "Leave & License Agreement"."::: Downloaded on - 09/06/2013 19:21:03 :::
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5 On 9th July, 2009, the parties entered into a last
Memorandum of Understanding (MOU), as the Respondent Company vacated the premises six months prior to the expiry of the agreement. Admittedly, the Petitioners have adjusted the licence fees payable out of deposit of the amount of Rs.
88,50,000/-. There was no deduction of any amount towards the service tax even on that date for the basic reason that there was no agreement whatsoever between the parties with regard to the payment /liability of the service tax.
6 Further, there is a letter dated 21st July, 2009 addressed by the Petitioner to the Respondent and the relevant part of the letter reads thus :
"I/We, further confirm that I/We have no claim whatsoever against Jet Airways (India) Limited in respect of the above and undertake not to raise and/or cause to be raised any claim in future."
7 The concept of the service tax has come into force from 01st June, 2007. A challenge was raised to the retrospective demand and it is pending in Supreme Court. The service tax is not a direct tax. It is an indirect tax. The party in a given ::: Downloaded on - 09/06/2013 19:21:03 ::: spb/ 17cp350-12.sxw case, therefore, may agree to pay the service tax as per the terms and conditions of the agreement. Admittedly, there was no such specific agreement with regard to the payment of the service tax. Principally the Petitioner who had let out the premises was liable for such service tax and not the Respondent.
8 Considering the scope and purpose of Section 433 of the Companies Act for winding up of a Company, the basic requirement is that the amount should be due and payable and crystallized on the first date of the statutory demand raised and even on the date of filing of such a winding up proceedings. Considering the above position on record, I am not inclined to accept the statement made by the learned counsel appearing for the Petitioner that the amount due and payable was crystallized on the relevant date and even today.
The clauses so referred above including the memorandum of understanding and the correspondence makes the things very clear that the Respondent-Company never admitted the liability of service tax. It is not even the case of the ::: Downloaded on - 09/06/2013 19:21:03 ::: spb/ 17cp350-12.sxw Petitioner that there was any specific written agreement with regard to the service tax. The contention revolves around the invoices issued as the Respondent Company on certain occasions made a part payment of the service tax as at that time they were occupying premises, is in no way can be stated to be binding agreement, as is sought to be contended by the learned counsel for the Petitioner. If there is no agreement and no admitted liability and if basically the service tax is an indirect tax, I am not inclined to accept, in view of the agreement between the parties and even considering the lock in period referred that it is sufficient to hold that the Respondent Company is liable for the service tax, as contended.
9 In Writ Petition No. 198 of 2012 between Tata Advanced Materials Ltd. vs. Tooltech Global Engineering Pvt. Ltd., decided by me on 17th October, 2012, I have made a reference to the observations of the Apex Court that the Apex Court recently in IBA Health (India) Private Limited vs. Info-Drive Systems SDN BHD,2 while dealing with the 2 2010 (10) SCC 553 ::: Downloaded on - 09/06/2013 19:21:03 ::: spb/ 17cp350-12.sxw concept of bonafide dispute, referring to winding up Petition under the Companies Act, the Apex Court has elaborated that the amount due and payable should be clear and outstanding on the date of the demand. If any amount, though crystallized, liable to be paid subject to contingencies and/or certain conditions, that just cannot be stated to be the amount due and payable by the Company.
10 We are not concerned with the rival contentions and the dispute so raised by and between the parties. Here it is sufficient to dismiss the Petition as there are disputed questions of facts and the law though revolving around the documents referred and relied by the learned counsel appearing for the Petitioner which in no way can assist to settle and/ or crystallize the amount of service tax as claimed from the Respondent.
11 Resultantly, the Petition is dismissed. No costs.
(ANOOP V. MOHTA, J) ::: Downloaded on - 09/06/2013 19:21:03 :::