Delhi District Court
M/S Sunglow Builders Pvt. Ltd vs Hdfc Bank Ltd on 13 June, 2025
IN THE COURT OF SH. DEEPANKER MOHAN: DISTRICT
JUDGE-04, SHAHDARA DISTRICT, KARKARDOOMA COURTS,
DELHI
CS No.2083/2016
IN RE:-
M/s Sunglow Builders Pvt. Ltd.
(A company incorporated under
The Companies Act, 1956)
Having its registered Office at:
11, New Rajdhani Enclave,
Vikas Marg, Delhi-110092 ....Plaintiff
VERSUS
HDFC Bank Ltd.
Karkardooma Branch G-1 & 2,
Ashish Corporate Tower,
Plot No.18, Community Centre,
Karkardooma, Delhi-110092
Also at Registered Office:
HDFC Bank House
Senapati Bapat Marg,
Lower Parel,
Mumbai-400013 .... Defendant
1. CS No. : 2083/2016
2. Under Section : Suit for possession, recovery
of Rs.15,41,744/- & mesne
profits/damages.
3. Date of institution : 03/01/2014
4. Reserved for judgment : 28/04/2025
5. Date of Judgment : 13/06/2025
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DEEPANKER by DEEPANKER
MOHAN
MOHAN Date: 2025.06.13
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JUDGMENT
1. Vide this judgment, this Court shall dispose of the suit for
possession, recovery of Rs.15,41,744/- & mesne profits/damages filed
by plaintiff against defendant on 03/01/2014.
AVERMENTS OF THE PLAINT
2. Plaintiff is a company incorporated under the Companies Act,
1956 having its registered office at 11, New Rajdhani Enclave, Vikas
Marg, New Delhi- 110092 and Sh. Prahalad Chaudhary has been
appointed as an authorized representative of plaintiff company vide
Board Resolution dated 26/12/2013.
3. Defendant was inducted as tenant in the premises Private No.G-
1 & 2, Ashish Corporate Tower, Plot No.18, Community Centre,
Karkardooma, Delhi-110092 by plaintiff vide registered Indenture of
Lease dated 20/12/2004 for a limited period of 9 years which
commenced w.e.f. 01/12/2004 and expired on 30/11/2013 at a monthly
rent of Rs.85,000/- excluding other charges & Taxes. As per Clause 3
of the Lease Deed it was stipulated that on expiry of every three years,
rent of the premises would be enhanced @ 15% to the last paid rent.
Accordingly, rent firstly increased w.e.f. 01/12/2007 and became
Rs.97,750/- per month & thereafter w.e.f. 01/12/2010 lastly became
Rs.1,12,413/- per month. The limited period of tenancy expired on
30/11/2013 and tenancy is determined by efflux of time.
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4. Plaintiff has served notice dated 10/10/2013 and notice-cum-
reply dated 03/12/2013 to defendant’s communication dated
29/11/2013 upon defendant but defendant has not vacated the tenanted
premises after expiry of the lease deed and only after filing of the
present suit, defendant had vacated and handed over the peaceful and
physical possession of the tenanted premises to plaintiff on
15/04/2014.
5. On 29/09/2020 Ld. Counsels of parties have submitted that
prayer clause (i) and (iv) of the plaint have been satisfied and the
dispute remains with respect to the payment of service tax,
maintenance charges and interest.
6. As per clause 2 (e) of the Lease Deed that parties shall oberve
and perform all the rules and regulations and bye-laws of the Society/
Association or the body of the persons, to be the In-charge of affairs of
the building, in which the demised premises is located. The occupants
of the building in which premises is located formed an Association
named as M/s Ashish Corporate Tower Welfare Association (Regd.) to
maintain the building and the said Assocaition is maintaining various
amenities, facilities, services, etc. in terms of rules & regulations
adopted by it. The expenses incurred thereon are payable on pro-rata
basis by the occupants of building.
7. Despite repeated demands made by the Association, defendant
deliberately failed to pay the maintenance charges of the Association
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DEEPANKER MOHAN
MOHAN Date:
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and finally vide its letter dated 19/05/2007, defendant conveyed the
plaintiff that defendant is ready to pay the sum of Rs.35,280/- towards
maintenance charges to the Association and the same shall be
recovered by the defendant from the monthly rent payable to the
plaintiff. Plaintiff refuted the defendant’s contention vide its letter
dated 22/05/2007 explaining that the Association is a society and it
was formed by the persons including bank i.e. Defendant and those
are in occupation of the building named as ‘Ashish Corporate Tower’.
The Association is providing number of amenities and facilities like
water, electricity, etc. availed by Bank and those persons in occupation
of the Tower. The maintenance charges are exclusive of the agreed
stipulated rent amount despite that defendant has illegally deducted
the maintenance charges from the rent payable to the plaintiff.
8. The Government of India vid notification dated 22/05/2007
under the amended provisions of Finance Act, 2004 imposed the
Service Tax upon the rent @ 12.36%, accordingly Plaintiff vide Its
Letter dated 25/05/2007 requested defendant to pay Service Tax w.e.f.
01/06/2007. The liability of Service Tax is statutory and has to be
borne by the recipient of the service and same cannot be shifted upon
the provider of service. In response, defendant refused to pay the
same. Plaintiff vide its Letter dated 18/07/2007 again reiterated its
demand for payment & liability of Service Tax but defendant has not
paid the same.
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9. Plaintiff had served a legal notice dated 30/09/2008 upon
defendant calling it to pay the Service Tax and Maintenance charges.
The defendant vide its reply dated 14/10/2008 refused to pay the
Service Tax. Plaintiff again reiterated its demand of maintenance
charges, Service Tax and interest thereon along-with arrears of rent
vide its Letter dated 13/08/2013 but defendant again refused to pay
Service Tax and Maintenance charges vide its reply dated 26/08/2013.
10. Plaintiff vide its Letter dated 10/10/2013 intimated defendant
about the determination of Lease by efflux of time, in advance and
asked it to handover the keys of the vacated tenanted premises on or
before 30/11/2013. The defendant replied the said letter vide reply
dated 29/11/2013. Plaintiff had sent their reply-cum-legal notice dated
03/12/2013 to defendant. The defendant was conveyed that it is liable
to pay maintenance charges which is illegally deducted from rent;
Service Tax; prevailing use and occupation charges of the premises
w.e.f. 01.12.2013 and interest upon all the arrears, besides notice of
Rs.11,000/- and also asked to deliver possession of the premises.
Despite service of legal notice, defendant did not complied with the
notice.
11. Plaintiff has deposited a sum of Rs.8,24,358/- with taxing
authority relating to service tax in order to avoid legal action.
Defendant is liable to pay the aforesaid amount with interest @ 18%
per annum, to plaintiff. Defendant is also liable to pay a sum of
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DEEPANKER MOHAN
MOHAN Date:
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Rs.28,740/- along with interest @ 18% per annum to plaintiff on
account of maintenance charges. The defendant is also liable to pay a
sum of Rs.4,63,820/- towards interest upon the amount deposited/paid
by plaintiff, till the date of filing of the suit. Hence, the present suit.
SERVICE OF SUMMONS
12. Summons of the present suit was issued to defendant vide order
dated 25.01.2014. Summons was duly served upon defendant on
20.02.2014 and subsequently, on 19.04.2014 written statement was
filed.
AVERMENTS OF THE WRITTEN STATEMENT
13. The defendant has admitted landlord-tenant relationship with
plaintiff and has admitted that defendant has taken the suit property on
rent vide registered Indenture of Lease dated 20.12.2024 for a period
of 09 years for commercial purposes. The defendant has admitted the
terms and conditions of the aforesaid lease deed. Defendant has also
admitted the communications exchanged between plaintiff and
defendant through letters and legal notices as mentioned in the plaint,
however, the claim of the plaintiff has been denied. After filing of the
present suit, defendant has also handed over vacant and physical
possession of the tenanted premises to plaintiff on 15.04.2014 and had
satisfied the reliefs prayed in prayer Clause No.(i) and (iv) of the
plaint. The defendant has denied its liability for making payment of
service tax and further pleaded that it is the liability of plaintiff to pay
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DEEPANKER MOHAN
MOHAN Date:
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service tax to government. It is further pleaded that there is no
covenant in the lease deed dated 20.12.2004 which fasten the liability
upon defendant to pay service tax in respect to suit property.
14. The burden to pay the service tax is upon plaintiff as per Clause
4(v) of the Lease Deed r/w Clause 7 of the Schedule. As per deed, all
taxes would be borne and paid by plaintiff thus the question of
defendant paying any taxes much less Service Tax does not arise.
Plaintiff is under the obligation to keep defendant indemnified against
any such liability. It is further pleaded that Service Tax, is a tax on
property and if the plaintiff has any grievance in respect of the
imposition of service tax, it is open for the plaintiff to take up the
matter in the appropriate forum with the Central Government. It is
further pleaded that the issue with regard to service tax on the renting
of immovable property is sub-judice before the Hon’ble Supreme
Court of India and till date no final order has been passed. It is further
pleaded that the contractual clauses (as in the present case) have to be
plainly read by the Court, and no attempt to supply meanings other
than the expressions used, and the contest visualized, can be resorted
to by the Court. The plaintiff is not entitled to claim any amount in
respect to Service Tax from defendant in any manner whatsoever.
15. It is further pleaded that plaintiff is also not entitled to claim
maintenance charges against defendant as the same is the liability of
the plaintiff and not of the defendant. It is further pleaded that the said
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DEEPANKER MOHAN
MOHAN Date:
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amount is also barred by limitation as the same has to be recovered
within a period of 03 years from the date when the same became
due/is paid. It is further pleaded that the present suit is liable to be
dismissed being meritless.
AVERMENTS OF THE REPLICATION
16. Replication to the written statement of defendant was filed on
behalf of plaintiff on 01.05.2014 wherein plaintiff denied the
averments of written statement. The plaintiff re-affirmed the
averments of the plaint.
FRAMING OF ISSUES
17. Upon completion of pleadings and considering that prayer
Clause No.(i) and (iv) of the plaint has been satisfied, the following
issues were framed on 29.09.2020 which are as under:-
1. Whether the defendant is liable to pay service
tax of Rs.8,24,358/- as claimed vide prayer clause
No.(iii) and service tax for the period from
December 2013 till 15.04.2014? OPP
2. Whether the defendant is liable to pay
Rs.28,740/- as maintenance charges, as prayed
vide prayer clause No.(ii)? OPP
3. Whether the defendant is liable to pay interest, if
so, at what rate and on what amount and for which
period? OPPCS No.2083/2016 Page Digitally
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DEEPANKER MOHAN
MOHAN Date:
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4. Relief.
EVIDENCE OF PLAINTIFF
18. Plaintiff to prove its case examined only one witness i.e. (i) Sh.
Prahalad Chaudhary, AR of plaintiff’s company himself as PW-1.
19. PW-1 Sh. Prahalad Chaudhary filed his evidence affidavit on
the line of averments mentioned in the plaint. On 21.10.2021 and
04.11.2022, PW-1 tendered his evidence by way of affidavit as
exhibited as Ex.PW1/A and also relied on the documents i.e.(1)
Ex.PW1/1(OSR)- Certificate of incorporation, (2) Ex.PW1/2- Board
resolution, (3) Ex.PW1/3- Letter dated 22.05.2007, (4) Ex.PW1/4-
Letter dated 18.07.2007, (5) Ex.PW1/5- Letter dated 13.08.2013, (6)
Ex.PW1/6- Letter dated 10.10.2013, (7) Ex.PW1/7- Legal notice dated
03.12.2013, (8) Ex.PW1/8- Calculation sheet of due amount, (9)
Ex.PW1/9 (Colly.) – Certificate dated 15.09.2022 along with Annexure
I & (10) Ex.PW1/10(Colly.) (OSR) (total 32 pages)- Original challans.
He also relied upon the documents which are already exhibited as
Ex.P-1 to Ex.P-15. On 22.12.2023, he was cross examined by Ld.
Counsel for defendant.
20. On 22.12.2023, PE was closed and the matter was listed for DE.
EVIDENCE OF DEFENDANT
21. Defendant to defend its case has examined only one witness i.e.
Sh. Suraj Kumar, AR of defendant as DW-1.
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22. DW-1 Sh. Suraj Kumar filed his evidence affidavit and on
18.03.2024, he tendered his evidence affidavit as Ex.DW1/A and also
relied on document i.e. (1) Mark A (Shown as Ex.DW1/1 in the
evidence affidavit and the same as now de-exhibited)- Photocopy of
the resolution passed at the meeting of the Board of Directors held on
17.01.2014, (2) Ex.DW1/1A- Power of Attorney dated 05.12.2023, (3)
Ex.P-3 (Shown as Ex.DW1/2 in the evidence affidavit and the same
was de-exhibited)- Copy of letter dated 19.05.2007, (4) Ex.P-4
(Shown as Ex.DW1/3 & Ex.DW1/4 in the evidence affidavit and the
same was de-exhibited)- Copy of letter undated issued by defendant,
(5) Ex.P-5 (Shown as Ex.DW1/5 in the evidence affidavit and the
same was de-exhibited)- Copy of letter dated 14.10.2008 issued by the
defendant, (6) Ex.PW1/5 (Shown as Ex.DW1/6 in the evidence
affidavit and the same was de-exhibited)- Copy of letter dated
13.08.2013 issued by defendant, (7) Ex.P6 (Shown as Ex.DW1/7 in
the evidence affidavit and the same was de-exhibited)- Copy of letter
dated 29.11.2013 issued by defendant, (8) Mark B (Shown as
Ex.DW1/8 in the evidence affidavit and the same was de-exhibited)-
Photocopy of letter dated 05.03.2014 issued by the defendant, (9)
Mark C (Shown as Ex.DW1/9 in the evidence affidavit and the same
was de-exhibited)- Photocopy of letter dated 08.02.2014 issued by the
defendant & (10) Mark D (Shown as Ex.DW1/10 in the evidence
affidavit and the same was de-exhibited)- Photocopy of letter dated
15.03.2014 issued by the defendant. On the same day, he was cross
examined by Ld. Counsel for plaintiff.
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23. On 18.03.2024, defendant’s evidence was closed and the matter
was listed for final arguments.
24. On 03.09.2024 and 28.04.2025, final arguments were heard.
Brief synopsis filed on behalf of plaintiff on 30.05.2024 and written
arguments along with case laws on behalf of defendant was filed on
04.06.2024.
25. On 06.05.2024, Ld. Counsel for defendant has fairly conceded
and submitted that this Court can adjudicate the present case and can
pass judgment on merits on the basis of material available on record
irrespective of the fact that the issue of service tax is sub-judice before
the Hon’ble Supreme Court of India because there is no blanket stay
passed by the Hon’ble Apex Court qua adjudication of the suits
pending before different jurisdictions/Courts in the country.
26. It was further submitted by Ld. Counsels for parties that the
factum of landlord-tenant relationship is admitted by the parties. The
execution, existence and validity of the lease deed is also not in
dispute. The parties are not at variance regarding the exchange of
letters and notices between them. It was further submitted that only a
legal issue is involved in the present case which can be adjudicated on
the basis of the material came on record and submissions/arguments of
the parties.
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27. Ld. Counsel for plaintiff argued that the liability to pay the
service tax is upon defendant. It was further argued that service tax
being an indirect tax is a value added tax which has to be borne by
recipient of the service and not by the service provider. In the present
case, it is the defendant who is under the obligation to bear the service
tax in respect to suit property. Ld. Counsel for plaintiff relied upon the
judgment of Hon’ble High Court of Delhi passed in “HDFC Bank Ltd.
Vs. Jagdish Lal Sharma (and vice versa)”, RFA No.59/2021 and RFA
No.196/2021 decided on 28.03.2023 (2023) SCC Online Delhi 3540
in support of his arguments and further submitted that the contentions
and arguments raised by the defendant in the present suit are
similar/same arguments raised by HDFC Bank in the said RFAs which
have been duly addressed and turned down by the Hon’ble High Court
of Delhi in its judgment dated 28.03.2023. It was further argued that
the Hon’ble High Court has held that the tenant/lessee is liable to pay
service tax being service recipient. It was further argued that the suit
of the plaintiff be decreed with cost against defendant.
ARGUMENTS OF DEFENDANT
28. Ld. Counsel for defendant argued that defendant is not liable to
pay the service tax to plaintiff in view of Clause 4(v) r/w Clause 7 of
the Lease Deed which specifically states that the monthly payment of
corporation/Municipal rates, charges, taxes, cessess and all other
outgoings shall be borne by plaintiff only. The word “all other
outgoings” subsequently to the words “Municipal rates, charges, taxes,
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and cessess” denote that the intent behind the specific clause is to
include all foreseen and unforeseen taxes/charges which can be
imposed on the demised premises. The service tax is deemed to be
covered under the expression “all other outgoings”, which as per the
terms of the lease deed is to be borne by plaintiff and hence, defendant
cannot be burdened with the payment thereof and/or reimbursed of the
same.
29. Section 68(1) of Finance Act, 1994 affix liability to pay service
tax on the person providing that taxable services i.e. plaintiff, rather
than the recipient of such service. The defendant relied upon the
judgment of Hon’ble High Court of Delhi passed in “Home Solutions
Retail India Ltd. Vs. Union of India“, 2009 (237) D.L.T. 209 (Delhi).
It was further argued that the service provider would be the assessee
as per Section 68 of the Finance Act, 1994 therefore, the service
provider is liable to pay the service tax to the Central Government
unless by way of a notification, the Central Government notifies any
other person to pay the service tax. The Central Government has
notified the certain services where the service recipient is liable to pay
service tax to the Central Government. From the perusal of the Rule
2(d) of the Service Tax, 1994, it is apparent that the activity of renting
out of or leasing out of immovable property or giving the same out on
licence basis, has not been notified to be such a service, therefore, the
burden of paying the service tax would fall on the service provider. It
was further argued that the onus to pay service tax is upon lessor and
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Ld. Counsel for defendant has also relied upon the judgment of
Hon’ble Supreme Court of India passed in “Union of India and Ors.
Vs. Bengal Shrachi Housing Development Ltd. and Ors.” (2018) 1
SCC 311. It was further argued that Article 265 of Constitution of
India categorically states that no tax shall be levied or collected except
with the authority of law. There is no provision under the act or under
the lease deed mutually agreed between the parties, to make defendant
liable to pay the service tax. It was further argued that Section 12B of
Central Excise Act, 1944, is a legal fiction which makes a rebuttable
presumption that the incident of the duty has been passed on to the
buyer of the goods. It was further argued that this fiction has been
created for the purpose of unjust enrichment by a person who is
claiming a refund of excise, same is clear by reading of the statement
of object and reason to the Amendment Act. It was further argued that
the legal fiction created by statue should not be interpreted to extend
beyond the scope it was created for and cannot be interpreted to be
applicable for all purposes including determining the rights of private
parties in respect of bearing of the burden of the incident of service
tax. It was further argued that Section 64(A) of the Sales Act is also
not applicable. It was further argued that there is no specific
agreement with regard to the payment of service tax hence, it is the
plaintiff herein i.e. the service provider/lessor, who is liable to pay the
service tax. Ld. Counsel for defendant relied upon the judgment
passed by the Hon’ble High Court of Bombay in “In Hindustan Dorr
Oliver Ltd. Vs. Jet Airways (India) Ltd.“, 2013 (1) BomCR 475. It
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was further argued that the lease deed should be plainly read. Ld.
Counsel for defendant relied upon the judgment passed by the
Hon’ble Supreme Court of India in “State of Gujrat (Commissioner
Sales Tax, Ahemdabad) Vs. Varity Body Builders“, AIR 1976 SC
2108. It was further argued that intention of the parties to the lease
deed must be considered and as per the lease deed, all taxes would be
borne and paid by plaintiff. Defendant further relied upon the
judgment passed by the Hon’ble Supreme Court in “Modi Company
Vs. Union of India“, AIR 1969 SC 9 . Ld. Counsel for defendant
further relied upon the judgments passed by the Hon’ble Supreme
Court of India in “Maruti Udhyog Ltd. Vs. Ram Lal and Ors.“, AIR
2005 SC 851; in “Thermal Contractors Associations Vs. Dir. Rajya 46
Vidyut Utpadan Nigam Ltd.”, 2006 (4) STT 18 and in “Numaligarh
Refinery Ltd. Vs. Daelim Industrial Company Ltd.“, (2007) 8 SCC
466. It was further argued that the operations of judgments relied upon
by plaintiff has already been stayed by the Hon’ble Supreme Court of
India. It was further argued that the suit of the plaintiff is liable to be
dismissed with cost.
APPRECIATION OF EVIDENCE AND DETERMINATION OF
THE CASE ISSUE WISE
ISSUE NO.1:- Whether the defendant is liable to pay service tax of
Rs.8,24,358/- as claimed vide prayer clause No.(iii) and service tax
for the period from December 2013 till 15.04.2014? OPP
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30. Service tax liability on renting of immovable property was
introduced under the provision of Section 65 (90a), Section 65 (105)
(zzzz) and Section 66 of the Finance Act, 1994 as amended by
Finance Act, 2007 w.e.f. 01.06.2007. In 2009, the Hon’ble High Court
of Delhi in “Home Solution Retail India Vs. Union of India“, (MANU
DE0371/2009 decided on 18.04.2009 struck down the levy of service
tax on renting of immovable property as “ultra virus”. Thereafter, in
the year 2010, an amendment was introduced by the Finance Act,
2010 whereby service tax was sought to be imposed with retrospective
effect from 01.06.2007 on the very act of renting of immovable
property, whether by licence or lease, by considering the same to be a
purported service.
31. Defendant relying upon the Clause No.4(v) of lease deed has
contended that all the taxes shall be borne by plaintiff. The Hon’ble
High Court of Delhi in “M/s Meattles Pvt. Ltd. Vs. HDFC Bank Ltd.”,
CS (OS) No.512/2012 decided on 19.10.2012 while dealing the
similar clauses has held that this clause refer only to those outgoings
in respect to the tenanted premises which are levied by Municipal
Corporation/Municipality/Gram Panchayat or any other authority.
Since service tax is not levied/recovered by Municipal
Corporation/Municipality/Gram Panchayat or any other authority, it
can hardly be disputed that it is not included in the term ‘outgoings’,
as qualified in Clause 4(v) of the Lease Deed. Since the expression
‘outgoings’, for the purpose of Clause 7 of the Schedule has to be read
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in terms of Clause 4(v) of the Lease Deed, it is obvious that the
liability of the lessor would be to pay only those taxes, charges and
other outgoings which are levied by Municipal
Corporations/Municipality/Gram Panchayat or any other authority. It
is, thus, quite clear that payment of service tax is not at all covered
under the covenant contained in the lease deed dated 25.11.2004. The
Hon’ble High Court has further held that since there is no agreement
between the parties to this suit, for shifting the ultimate liability
towards the service tax to the plaintiff, nothing in law prevent it from
recovering the same from the defendant. It was held that ” I have also
perused the other two judgments relied upon by the defendant and
none of them applies to the legal issue involved in this case, i.e. right
of service provider to recover the amount of service tax from the
recipient of the service, in a case where there is no contract between
the parties as to who has to ultimate meet this statutory liability” . The
Hon’ble High Court further found plaintiff entitled to recover service
tax against defendant.
32. The Division Bench of Hon’ble High Court of Delhi has upheld
the judgment passed by the Single Judge of Hon’ble High Court of
Delhi in RFA(OS) No.24-25/2011 and RFA(OS) No.105/2014 and has
held in para no.31, 32, 33 and 34 of its judgment which is reiterated as
under:-
“31. Thus a contract has to be construed by looking at the document as a whole and the
meaning of the document has to be what the parties intended to give to the document
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yield unless expressly stated. In the present case it will also have to borne in mind
whether the parties intend to include taxes which were not contemplated at the time of the
agreement as indubitably the agreements between the parties in the three suits were
entered into prior to the Finance Act, 2007 coming into force w.e.f. June 01, 2007.
32. In the agreement between HDFC Bank and Meattles Clause 4(v) imposes liability of
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 only. It is well
settled that the Municipal Corporation, Municipality, Gram Panchayat or local authority
is distinct from the government and thus the clause inter se the parties cannot be said to
cover the exemption of HDFC Bank to pay to Meattles service tax paid by it to the
government pursuant to the Finance Act, 2007.
33. As regards the lease deed and the agreement of maintenance of common services and
facilities between Satya and PLBA Clause 5 of the lease deed as noted above provides
that the lessor shall continue to pay all or any taxes, levies or charges imposed by the
MCD, DDA, L&DO and or Government, Local Authority etc. By use of the words
“Lessor shall continue to pay” it is evident that the parties contemplated the existing
taxes, levies or charges and not future. Even as per the agreement of maintenance of
common service facilities though the same has no application to the service tax however,
still the said clause II(1) cannot be said to exclude HDFC Bank from paying future
service tax.
34. In view of the discussion aforesaid the judgments and the decrees passed by the
learned Single Judge in the three suits are upheld. Appeals are dismissed. Parties will bear
their own costs.”
33. The Hon’ble High Court of Delhi in “HDFC Bank Ltd. Vs.
Jagdish Lal Sharma (and visa versa)”, 2023 SCC Online Delhi 2540
relying upon the aforesaid judgment of Division Bench of Hon’ble
High Court of Delhi has held that the service tax is to be ultimately
borne by recipient of the service, though it is service provider who is
statutorily liable to pay the said tax to the exchequer. It was further
held that Section 83 of the Finance Act r/w Section 12A and 12B of
the Central Excises and Salt Act, 1944, give ample right to the service
provider to recover the amount of service tax paid by him from the
recipient of the service and had not been the legislative intent, there
CS No.2083/2016 Page 18 of 24
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signed by
DEEPANKER
DEEPANKER MOHAN
MOHAN Date:
2025.06.13
19:12:20
+0530
would have been no occasion to apply Sections 12A and 12B of the
Central Excises and Salt Act, 1944 in relation to service tax. It was
further held that in the absence of Section 12A and 12B of the Central
Excises and Salt Act, 1944, in relation to service tax, nothing
prevented the service provider from entering into an agreement with
the recipient of the service, for reimbursement amount of the service
tax, by the recipient of the service to its provider. The Hon’ble High
Court has further held “In view of the clear observations of the Courts
that there vests a legal right in the service provider to recover the
amount of service tax from the recipient of the service, even if there is
no agreement between them for reimbursement of such tax by the
recipient of the service to its provider, this Court find no reason
warranting interference with the impugned order of the Ld. Trial
Court.”
34. The Hon’ble High Court in RFA No.59/2021 and RFA
No.196/2021 in para no.24 of its judgment has further held that
Hon’ble Supreme Court of India in Bengal Shrachi (supra) , has held
that liability of payment of service tax is upon the lessor, however,
Hon’ble Supreme Court has not disturbed the findings of the Hon’ble
High Court of Delhi in Satya Developers (Supra) , that while the
service provider is liable to pay the service tax to the exchequer it is
entitled to recover the same from the service recipient as also that the
lease deeds or contract were entered into between the parties, service
tax was not envisioned and parties contemplated only existing taxes.
CS No.2083/2016 Page 19 of 24
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by DEEPANKER
DEEPANKER MOHAN
MOHAN Date:
2025.06.13
19:12:26 +0530
The Para no.24 of the judgment is hereby reproduced for facilitation:-
“24. Insofar as the Bank places reliance on the judgment of the Supreme Court in
Bengal Shrachi (supra), suffice would it be to state that the Trial Court has rightly
held that though the Supreme Court has held that liability of payment of service
tax is on the lessor, however, Court has not disturbed the findings of this Court in
Satya Developers (supra), that while the service provider is liable to pay the
service tax to the exchequer, it is entitled to recover the same from the service
recipient as also that when the Lease Deeds or contracts were entered into
between the parties, service tax was not envisioned and parties contemplated only
existing taxes. This being an overwhelming circumstance, cannot come in the way
of a lessor recovering the service tax from the lessee. In view thereof, no infirmity
can be found with the impugned order to this extent.”
35. All the arguments and judgments relied upon by the defendant
have been dealt by the Hon’ble High Court of Delhi in CS (OS)
No.512/2012 decided on 19.10.2012, RFA No.59/2021 and RFA
No.196/2021 and RFA (OS) No.24-25/2011 and RFA (OS)
No.105/2014 and thereafter, the Hon’ble High Court has held that the
recipient of the service is liable to pay service tax and if service tax
paid by the service provider to the government/tax authorities then he
shall be entitled to recover the same from the recipient of service.
36. Admittedly, when indenture of lease dated 20.12.2004 was
executed, the service tax law was not in existence. Considering the
above judgments passed by the Hon’ble High Court of Delhi and facts
and circumstances of the case, this Court is of the opinion that the
Clause 4(v) of the Indenture of Lease dated 20.12.2004 does not
include service tax and therefore, this Court concludes that defendant
being the recipient of the service is liable to pay the service tax to
plaintiff i.e. service provider. As per document Ex.PW1/8 and
CS No.2083/2016 Page 20 of 24
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DEEPANKER by DEEPANKER
MOHAN
MOHAN Date: 2025.06.13
19:12:31 +0530
PW1/9(Colly.), plaintiff claimed an amount of Rs.8,73,822/- paid to
authorities from June, 2007 to March, 2014. The present suit was filed
on 03.01.2014 and defendant has handed over the possession of the
suit property to plaintiff on 15.04.2014. Perusal of the document
Ex.PW1/8 and Ex.PW1/9(Colly.) reflect that plaintiff had paid some
payments between June, 2007 till April, 2009 i.e. more than 03 years
before the suit was filed. Article 23 of Limitation Act provides a
limitation of 03 years, to be commuted from the date money is paid, in
a suit for money payable to the plaintiff for money paid for the
defendant. Since the case of the plaintiff is that the service tax is
ultimately borne to be borne by the defendant, the suit falls in preview
of Article 23 of the Limitation Act. The amount of service tax paid
upto April, 2009 is hopelessly time-barred. The plaintiff had paid
service tax for the period May, 2009 to March, 2010, April, 2010 to
March, 2011, April 2011 to March, 2012 on 05.04.2013, 05.04.2013
and 28.09.2012 respectively. The plaintiff has further paid service tax
for the period from April, 2012 to March, 2014 from 05.06.2012 till
17.04.2014. Considering the aforesaid period, plaintiff had paid an
amount of Rs.6,38,171/- to government/authorities as service tax on
behalf of defendant, therefore, plaintiff is entitled to recover the said
amount from defendant. A money decree for recover of a sum of
Rs.6,38,171/- is accordingly passed in favour of plaintiff and against
defendant. Issue No.1 is accordingly decided in favour of plaintiff.
ISSUE NO.2:- Whether the defendant is liable to pay Rs.28,740/- as
CS No.2083/2016 Page 21 of 24
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by DEEPANKER
DEEPANKER MOHAN
MOHAN Date:
2025.06.13
19:12:37 +0530
maintenance charges, as prayed vide prayer clause No.(ii)? OPP
37. Plaintiff has also claimed an amount of Rs.28,740/- towards
maintenance charges against defendant, however, plaintiff has not
disclosed in his entire plaint for which period the said amount is
due/outstanding. Plaintiff has not filed any material on record which
can substantiate its claim to recover the amount of Rs.28,740/- against
defendant. Plaintiff has not examined the authorized persons of the
society or any witness to prove that defendant has not paid the
maintenance charges amounting to Rs.28,740/- to the society or that
plaintiff had paid such amount to the society on behalf of defendant
which plaintiff has not repaid or that defendant has paid such amount
to society and deducted the same from the rent. No cogent, reliable,
independent and documentary evidence has been led by plaintiff to
substantiate his claim of Rs.28,740/- against defendant, therefore, the
same is denied. Issue No.2 is accordingly decided against plaintiff and
in favour of defendant.
ISSUE NO.3:- Whether the defendant is liable to pay interest, if so, at
what rate and on what amount and for which period? OPP
38. Admittedly, the tenanted premises was let out to defendant for
commercial purposes. It is also not in dispute that plaintiff has paid
service tax amounting to Rs.8,73,822/- to the authorities on behalf of
defendant though this Court has concluded that plaintiff is entitled for
recovery of an amount of Rs.6,38,171/- against defendant. The
defendant bank had retained money due to the plaintiff despite several
CS No.2083/2016 Page 22 of 24
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by DEEPANKER
DEEPANKER MOHAN
MOHAN Date:
2025.06.13
19:12:42 +0530
demands and utilized the same into its banking business, therefore,
this Court considering the facts and circumstances of the case, deems
it appropriate to award interest @ 12% per annum from 28.09.2012
till the date of filing of the suit on the amounts paid by plaintiff to the
authorities as service tax on behalf of defendant. Considering the facts
and circumstances of the case, material came on record and
considering that the transaction between plaintiff and defendant was a
commercial transaction, therefore, this Court deems it appropriate to
award interest @ 12% per annum on the amount of Rs.6,38,171/- from
the date of filing of the present suit till its realization. Issue No.3 is
accordingly decided in favour of plaintiff and against defendant.
39. Relief/Final judgment
I. A money decree for recover of a sum of Rs.6,38,171/- is
accordingly passed in favour of plaintiff and against defendant.
II. Interest @ 12% per annum from 28.09.2012 till the date of
filing of the suit on the amounts paid by plaintiff to the authorities as
service tax on behalf of defendant, is awarded in favour of plaintiff
and against defendant.
III. Interest @ 12% per annum on the amount of Rs.6,38,171/- from
the date of filing of the present suit till its realization is awarded in
favour of plaintiff and against defendant.
IV. Cost of the suit is also awarded in favour of plaintiff.
40. Present suit is partly decreed. Decree sheet be prepared
CS No.2083/2016 Page 23 of 24
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by DEEPANKER
DEEPANKER MOHAN
MOHAN Date:
2025.06.13
19:12:47 +0530
accordingly.
41. Present suit is accordingly disposed of.
42. File be consigned to record room after due compliance.
Digitally signed DEEPANKER by DEEPANKER MOHAN MOHAN Date: 2025.06.13 19:12:52 +0530 Announced in the open Court (DEEPANKER MOHAN) on this 13th day of June, 2025 DISTRICT JUDGE-04, SHAHDARA DISTRICT KKD Courts, Delhi CS No.2083/2016 Page 24 of 24