SC asks TTD to confirm Grama Panchayat Status
By Express News Service | Published: 21st November 2012 10:57 AM |
The Supreme Court on Tuesday directed the Tirumala Tirupati Devasthanams (TTD) to file an affidavit showing that it is a gram panchayat.
The apex court gave the direction after hearing arguments on a petition challenging the levy of service tax on the earnings from the guest houses under the TTD.
A Bench comprising Justice A K Patnaik and H L Gokhale also asked the TTD to file the relevant notifications in this regard and posted the matter for final hearing on January 29.
The Bench heard arguments from senior counsel K Parasaran, appearing for the TTD, and Solicitor General Rohinton Nariman on whether service tax can be levied on proceeds from guest houses, which provide acomodation to pilgrims.
Parasaran told the Bench that the TTD only provides short-term accommodation to pilgrims, visiting Venkateshwara temple.
It initially gives the guest houses on rent for one day and on request extends it by another day. They are not allowed to stay for more than two days in the guest houses, he disclosed.
The TTD is collecting only maintenance charges for providing water and other amenities and is not making any profit on the guest houses. Therefore, service tax cannot be levied, the senior counsel contended.
He also argued that the TTD is a charitable institution and hence not liable to pay tax. “The principle that it has to be commercial activity has been ruled by this court. It is a local government. You don’t levy service tax on a local government,” Parasaran said.
When it was pointed out that the guest houses do not cater to the needs of everybody, the counsel said the TTD also has choultries. And the TTD provides ‘free meals’ to pilgrims, he added.
Justice Gokhale, who said that the case will be heard at length in the next sitting, observed that the TDD will have to pay the tax with appropriate interest if it goes against them.
The TTD in its petition also averred that the apex court had held in Municipal Council, Tirupati Vs Tirumala Tirupati Devasthanams, (1974) 1 that choultries meant for temporary accommodation of the pilgrims are run without profit motive. The TTD moved the apex court challenging the Andhra Pradesh High Court order which had dismissed its petitions.