JUDGEMENT

JYOTI SINGH, J. (ORAL)

1. RFA No.59/2021 has been filed by HDFC Bank Ltd. (hereinafter referred to as ‘the Bank’) assailing the impugned judgment and order dated 23.12.2019 passed by the Trial Court whereby the Trial Court has decreed the suit for recovery, declaration and mandatory injunction filed by Shri Jagdish Lal Sharma (hereinafter referred to as ‘the Plaintiff’) against the Bank, for a sum of Rs.27,86,374/- with future interest @ 12% per annum for the lease period w.e.f. 01.06.2007 to 30.05.2015, subject to payment of deficient court fees. RFA No.196/2021 has been filed by the Plaintiff assailing the judgment and decree dated 23.12.2019 to the extent the Trial Court has rejected the claim for grant of pendente lite interest on the decretal amount for the lease period w.e.f. 01.06.2007 to 30.05.2015. Plaintiff seeks pendente lite interest on the service tax deposited for the said period @ 18% per annum. Since both the appeals arise out of a common judgment and the issues are inextricably linked, they were heard together and are being decided by this common judgment.

2. At the outset, learned counsel for the Respondent apprises the Court that deficient court fees, directed by the Trial Court in paragraph 52 of the impugned judgment has been deposited and hands over a photocopy of the e-Court receipt, reflecting the said payment. The document is seen by the counsel for the Bank and he is satisfied by the compliance. The receipt is taken on record and shall form a part of the paper books in the present appeals.

3. Factual matrix to the extent relevant and necessary is that Plaintiff had let out the basement and ground floor of the premises bearing No.499, Kohat Enclave, Pitampura, Delhi to the erstwhile Centurion Bank of Punjab Ltd., now amalgamated with the Bank, for carrying out its business of banking. Premises was initially leased out vide Lease Deed dated 07.05.2007 for the period 01.06.2006 to 30.05.2009 and lease was further renewed for two terms i.e. from 01.06.2009 to 30.05.2012 and 01.06.2012 to 30.05.2015, by Registered Lease Deeds.

4. Case set up by the Plaintiff before the Trial Court was that at the time of executing the Lease Deed, service tax was not in operation and hence no clause pertaining to service tax was incorporated in the Lease Deed. Notification dated 22.05.2007 and the Circular dated 04.01.2008, pertaining to levy of service tax was struck down by the Division Bench of this Court in W.P.(C) 1659/2008 and the Statute was later amended by Section 76 of Finance Act, 2010 but made effective retrospectively w.e.f. 01.06.2007. Consequently, rental income from immovable properties for ‘commercial purposes’ was subjected to service tax by inserting Sub-section 90(a) in Section 65 of Chapter V of Finance Act, 2007 vide Section 135, thereof. As a result, service tax became payable w.e.f. 01.06.2007 and Plaintiff vide letter dated 24.04.2012 called upon the Bank to pay the service tax on the rent, along with arrears. Bank, however, refused to pay and sent a letter dated 31.05.2012, taking a stand that the liability to pay the service tax was of the Plaintiff, he being the ‘service provider’.

5. Plaintiff deposited part amount of the outstanding service tax, amounting to Rs.3,94,962/- for the years 2007, 2012 and 2013 and demanded the amount from the Bank, but to no avail, leading to filing the suit, as the last resort to recover his alleged dues. Upon being served with the summons, Bank filed written statement and contested the suit on the ground that it was inducted as a tenant vide Registered Lease Deed dated 22.12.2009, after merger with the erstwhile lessee, for a period of six years and as per Clause 7 of the Lease Deed, all property taxes, municipal taxes and other outgoings in respect of the premises were payable by the lessor i.e. the Plaintiff. The Lease Agreement contained no stipulation for passing the burden of service tax on the Bank. It was also the stand of the Bank that Section 68(1)