JUDGMENT

V.K. Jain, J. This is a suit for declaration, recovery of money and injunction. The plaintiff had let out premises measuring 2700 sq. ft. in property bearing No.3909-3912 Hamilton Road, Mori Gate, Kashmere Gate, Delhi to the defendant vide registered lease deed dated 25.11.2004. The lease expired by efflux of time and now the defendant continues to occupy the premises as a month to month tenant. The renting of immovable property for the commercial purpose was subjected to Service tax by inserting sub-Section 90(a) in Section 65 Chapter V of the Finance Act , vide Section 135 of Finance Act 2007. As a result, Service tax became payable with effect from 1.6.2007. The plaintiff called upon the defendant to pay arrears of Service tax. The defendant, however, took the stand that it is not liable to pay Service tax to the plaintiff. Accordingly, the plaintiff has sought recovery of Rs.14,08,553/- towards arrears of Service tax for the period June, 2007 to January, 2012. It has also claimed interest on the aforesaid amount @ 18% per annum amounting to Rs.6,07,390/-, thereby making a total sum of Rs.20,15,943/-. The plaintiff has also sought a declaration to the effect that the defendant is liable to pay service tax on the lease rent. A mandatory injunction has also been sought requiring the defendant to pay Service tax on the lease rent.

2. The defendant has contested the suit and has denied any liability to pay service tax. It is further alleged that in terms of the lease deed dated 25.11.2004, the liability to pay service tax is of the lessor.

3. The following issues were framed on the pleading of the parties on 26.9.2012:-

1. Whether the defendant is liable to pay service tax on rent, as alleged in the plaint? OPP

2. To what amount, if any, the plaintiff is entitled from the defendant? OPP

3. Whether the suit is barred by limitation? OPD

4. Since there was no dispute on facts, the matter was listed for final hearing and arguments have accordingly been heard. The plaintiff has filed an affidavit dated 6.10.2012 giving details of the service tax deposited by it from time-to-time in respect of the premises let out to the defendant.

5. ISSUE NO.1:

The first question which comes for consideration in this case is as to whether the lease deed executed between the parties deals with the payment of service tax and if so, who under which term of the said deed is liable to pay the said tax. Clause 4(v) of the lease deed reads as under:-

"The municipal taxes, rates, charges and other outgoings in respect of the demised premises that would be determined/fixed/varied from time to time by the Municipal Corporation/Municipality/Gram Panchayat or any other local authority shall be paid by the Lessor or the Lessee as specified/stipulated in the schedule annexed herewith and shall keep the other party indemnified at all times against the same."

Clause 7 in the schedule to the lease deed reads as under:-

"Monthly payment of To be borne by the Lessor only. Corporation/Municipal rates, Charges, taxes cessess and all other outgoings"

6. Since the lease deed having been executed on 9.6.2004 and the service tax having been levied retrospectively with effect from 1.6.2007, it is obvious that the payment of service tax could not have been in contemplation of the parties at the time this deed was executed. Therefore, there could have been no agreement between the parties specifically with respect to payment of service tax. The question which then arises is as to whether service tax can be said to be covered under the above referred clause of the lease deed. Admittedly, service tax is neither a municipal tax nor a charge, this being a tax on services levied by Union of India. As regards, the expression `outgoings' used in the above referred clause, a careful examination of the clause would show that the expression `outgoings' is qualified by the words `that would be determined/fixed/varied from time to time by the Municipal C