The Supreme Court on Wednesday stayed a service tax on the commercial rentals that was levied in last year?s union budget.
The apex court stayed an earlier Bombay High Court decision that upheld the government proposal to bring the commercial renting of properties under services tax net.
The 10% tax was originally introduced by then finance minister P Chidambaram in 2007 that was subsequently stayed by the Delhi High Court. The current finance minister not only brought back the service tax on rentals in his 2010-11 budget proposal but also gave it a retrospective effect from 2007, from the year when Chidambaram first levied it.
Over the last one year, the Punjab and Haryana High Courts, the Karnataka High Court , the Orissa High Court, the Bombay High Court and last week the Delhi High Court upheld the decision of the government.
The Retailers Association of India, that appealed to the apex court, says its nearly 400 members would have to shell out more than R1,000 crore if they have to pay the service tax retrospectively.