The Punjab and Haryana High Court recently comprising of a bench of Justice Vinod S. Bhardwaj held that service tax is not applicable to cycle parking stands and ordered the release of the security amount along with interest accrued on the same in favour of the petitioner. (Sham Lal Versus State of Haryana and others)
Facts of the case
The present petition writ petition had been filed under Article 226/227 of the Constitution of India for seeking issuance of directions in the nature of 'mamdamus' to the respondents to decide the legal notice dated 28.08.2013 and 02.06.2014 and also that an amount of Rs. 1,56,000/- of the petitioner lying deposited with respondent no. 3 be released to him along with interest.
The petitioner had taken vacant land on lease at Bus Stand, Karnal, for parking of cycle/scooters during the period of 04.10.2011 to 31.03.2012, as also for the financial year 2012-2013. The petitioner was directed to deposit an amount of Rs. 1,56,000/- as refundable security along with the rental as agreed. The petitioner claims to have regularly deposited the due rent/charges leviable in terms of the Tender for the vacant land. The petitioner was served with a notice by the respondent Department that service tax amount is required to be deposited by the petitioner to which a response was filed to the effect that in terms of Section 65 (105) (zzzz) of the Finance Act, 1994, the service was not leviable upon the petitioner for the said parking services.
After completion of the period of contract, the petitioner approached the respondents for seeking release of the security amount, however, no heed was paid to the same. The present petition was thereafter filed as the respondents fail to refund the security deposit withheld for no valid reason.
A response on behalf of respondents no. 2 and 3, i.e. the Director General-cum-Transport, Commissioner, Haryana Roadways and the General Manager, Haryana Roadways, Karnal, respectively, was filed wherein the factual aspect has not been disputed. It was however been pointed out that as per Clause 11 of the agreement signed between the parties, the petitioner was liable to pay all applicable taxes and that the petitioner was requested by respondent no. 3 to deposit the service tax which was not done. Resultantly, the amount in question was rightly withheld.
The respondent department for service tax has thus supported the claim of the petitioner.
Courts Observation and Judgment
The bench at the very outset observed, "It is evident from a perusal of the aforesaid response filed by the respective authorities that the stand of respondents no. 2 and 3 was to the effect that they had withheld the amount solely for the reason that service tax liability had not been cleared by the petitioner whereas the Department of Central Excise (as it was then), now the Assistant Commissioner Central GST clearly states that in the present case service tax was not applicable and that no demand of service tax has ever been raised by the concerned department."
The bench allowing the petition remarked, "Consequently, the retention of the aforesaid security money deposited by the petitioner is per se not justified. The same is accordingly directed to be refunded expeditiously and preferably within a period of four weeks of the receipt of the certified copy of this order. It has also been pointed out by the petitioner that the aforesaid amount has been kept in a Fixed Deposit by respondents no. 2 and 3. The interest so accrued on the aforesaid deposit shall also be released in favour of the petitioner. The petition is accordingly allowed."
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