TTD argues against service tax in SC
By Express News Service | Published: 21st November 2012 12:06 PM |
After hearing arguments on a TTD petition challenging the levy of service tax on the earnings from the guest houses, the Supreme Court on Tuesday directed the Tirumala Tirupati Devasthanams to file an affidavit showing that it is a gram panchayat.
A bench comprising Justice A K Patnaik and Justice 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 assisted by Sridhar Potaraju appearing for the TTD and solicitor general Rohinton Nariman on the question whether service tax can be levied on the monies TTD receives on guest houses by providing accommodation to visiting pilgrims.
Parasaran told the bench that the TTD only provides short-term accommodation to pilgrims visiting Lord Venkateshwara.
It initially gives the guest houses on rent for one day and on request extends it by another day.
TTD is collecting only maintenance charges for providing water and other amenities and is not making any profit over the guest houses.
Therefore, service tax cannot be levied, the senior counsel contended.
Moreover, TTD is a charitable institution and on this ground also 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 argued.
When it was pointed out that the guest houses do not cater to the needs of everybody, the counsel said that TTD also has choultries.
And the TTD provides ‘Free annadanam’ (free meals) to pilgrims.
The solicitor general said that the petitioners “admit that they are running guest houses.
They collect Rs 30 crore and say they don’t have to pay tax.
” To this, Justice Patnaik said they say that they are constructing roads.
Rohinton said, “It is the so-called rich who are paying.
Why should they not collect from them?” The TTD moved the apex court challenging the AP High Court order which had dismissed its petitions.