The Indian government’s decision to impose a 12% service tax on commercial rents as part of its 2007-08 union budget has been met with a barrage of lawsuits, mostly from retailers.
Across the country, around 30 cases have been filed in court by some of India’s leading retailers such as Pantaloon Retail, Shoppers Stop and Lifestyle International.
Also challenging the new tax are the Retailers Association of India, the Confederation of Real Estate Developers Association of India and Multiplexes Association of India, which have filed a case in Bombay High Court.
[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”3″ ihc_mb_template=”2″ ]
“It’s an unconstitutional tax,” Rishi Agrawala, a lawyer representing several retailers in multiple cases, is quoted by Livemint.com as saying.
Uncertainty over whether retailers or developers should pay the tax has led to increased friction between the two groups, with both arguing the other should take on the burden.
As per lease agreements with developers, “the liability is that of the owner to pay the service tax,” argued Fun Multiplexes, an Essel Group company, in a petition filed in Delhi High Court earlier this month.
Retail companies such as Fun Multiplex say the tax will hurt them as they are already reeling under soaring rents charged by mall developers.
[/ihc-hide-content]
