S.RAVINDRA BHAT, J

1. These two suits involve determination of common questions of fact and law; they were accordingly heard together. The plaintiff claims declaratory and injunctive relief as to whether it or the defendant has to bear service tax liability in respect of the rents paid (by the defendant) and received (by the plaintiff). In addition, money decrees for specified amounts, is claimed.

2. The Plaintiff Society is owner of the building Pearey Lal Bhawan located at 2, Bahadur Shah Zafar Marg, (hereafter called “the suit premises”) and theprincipal lesseeof the land. The Plaintiff had entered into a registered Lease Deed on 09.10.2006 “first lease” with the Defendant, (hereafter “Satya Developers”) in respect of an area measuring 2818 sq. ft. on the ground floor of the premises Pearey at Lal Bhawan. On 16October, 2006, the parties entered into an Agreement for Maintenance of Common Services and Facilities in respect of the leased premises.

3. It is the common case of the parties that with effect from 1st June, 2007 the Central Government, by amending Chapter V of the Finance Act, 1994, levied service tax on the renting of immoveable property for business purposes. The plaintiff contends that the said levy tax is in the nature of an indirect tax, which has to be deposited by the service provider, after collecting the same from the user of the service. It is de-facto and de-jure a tax on the service and not a tax on the service provider. It contends that the burden of service tax has to be borne by the user of the service provider. The plaintiff relies on the Madras High Court judgment in All India Tax Payers Welfare Assn. v. Union of India reported in, 2006 (4) S.T.R. 14; Vindhyachal Distilleries v. State of M.P. a Madhya Pradesh High Court decision, reported in 2006 (3) STR, 723 (M.P.), Tamil Nadu Kalyana Mandapam Assn. v. Union of India reported in 2006 (3) S.T.R. 260 (S.C.), a decision of the Supreme Court, and Thermal Contractors Assn. v. Dir. Rajya Vidyut Utpadan Nigam Ltd., reported in 2006 (4) S.T.R. ( All.) a decision of the Allahabad High Court.

4. The plaintiff submits that service tax, levied by the Central Government, is not in the nature of a tax on property, as under the Constitutional scheme only the State Legislatures have the power to levy tax on property, but a levy on the service, and to be collected from the beneficiary of the service, such as the lessee Defendant, in this case. The suit states that in keeping with this position of law the bills of lease rental and maintenance charges sent to the Defendant from June, 2007, onwards included an amount on account of service tax and cess at the rate of 12.36% on the rent payable.

5. On 11 June, 2007, the Defendant by its letterrepudiated the plaintiff’s stand, and stated that it (the plaintiff) had to bear the incidence of service tax. The plaintiff denied this position, by its letter dated 26June, 2007. The parties thereafter exchanged communication, whereby they maintained their stated positions.

6. The plaintiff submits that the position in law being settled that service tax is a levy on the service, and having regard to the amendment to the Act, whereby leasing or renting properties, is deemed to be a service, the service consumer, who in this case, is the lessee has to bear the tax, as it is an indirect tax. The plaintiff relies on the definition clause, Section 64 (105), which defines “taxable service” as follows:

“(zzzz) …..to any person, by any other person in relation to renting of immovable property for use in the course or furtherance of business or commerce.

Explanation 1.—For the purposes of this sub-clause, “immovable property” includes—

(i) building and part of a building, and the land appurtenant thereto;

(ii) land incidental to the use of such building or part of a building;

(iii) the common or shared areas and facilities relating thereto; and

(iv) in case of a building located in a complex or an industrial estate, all common a