Today(27th August),The Supreme Court upheld the Delhi High Court’s ruling directing PVR INOX to appeal a Rs.17 crore service tax demand to the appropriate tribunal. This decision addresses the service tax applicability on income from renting properties before the GST regime.
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NEW DELHI: Today(27th August), The Supreme Court of India upheld a Delhi High Court ruling that directed PVR INOX, a leading multiplex chain, to approach the appropriate appellate tribunal if it intended to contest a Rs.17 crore service tax demand levied against the company. This ruling comes as part of the ongoing litigation concerning the applicability of service tax on the income generated from renting immovable properties during the pre-Goods and Services Tax (GST) regime.
A Bench comprising Justices BV Nagarathna and N Kotiswar Singh was tasked with hearing the appeal filed by PVR INOX against the Delhi High Court‘s earlier decision dated August 5. The Supreme Court, after considering the arguments presented, refused to interfere with the High Court’s order. Instead, the Bench advised PVR INOX to seek relief by filing an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) within a period of 15 days.
This legal battle began when PVR INOX received a notice on April 1 of this year from the Commissioner of Central GST, Delhi West, demanding a sum of Rs.17 crore. This amount included not only the principal tax amount but also interest and penalties. The demand was related to service tax liabilities during the period before the implementation of GST.
PVR INOX’s Contentions
PVR INOX, a prominent player in the entertainment industry, challenged this tax demand on multiple grounds. The company argued that the jurisdiction for issuing such tax demands should be in Mumbai, not Delhi. Additionally, PVR INOX pointed out that some of the demand notices were issued to Satyam Cineplexes, a company it had acquired in the past.
Despite these contentions, the Delhi High Court had earlier declined to provide relief to PVR INOX. The High Court emphasized that the multiplex giant had a valid and equally effective remedy available through a statutory appeal before the CESTAT. Given this, the High Court had refused to quash the show-cause notices issued by the tax authorities.
Representing PVR INOX in this crucial legal matter was Economic Laws Practice Partner, advocate Kumar Visalaksh, along with advocate Mahfooz Ahsan Nazki. During the proceedings, the legal team reiterated their arguments about jurisdictional issues and the acquisition of Satyam Cineplexes. However, both the Delhi High Court and now the Supreme Court have maintained that the appropriate course of action for PVR INOX is to first approach the CESTAT.
