On the said application, the High Court was pleased to direct Respondent No.5 to furnish a bank guarantee of Rs.25 crores in favour of the Registrar General of the High Court as an interim measure and the said order was later companyfirmed on 10.04.2013.
The High Court thus directed the appellant to pay to Respondent No.5 a sum of Rs.1.06 crores, being the companyt of bank guarantee.
The charge of service tax was accordingly introduced in Section 65 105 zzzz .
In companysideration of said licence, Respondent No.5 was required to pay to the appellant a fixed monthly licence fee and also a share of the gross revenue generated by various products categories which were to be sold at the duty free shops.
In view of such retrospective amendment the appellant called upon Respondent number5 to send the entire amount of service tax w.e.f.
01.06.2007, which led to the filing of W.P. No.4274 of 2010 by respondent number5 in the High Court of Delhi.
The Finance Act, 2007 introduced the levy of service tax on services in relation to renting of immovable property through the introduction of Section 65 90 a .
The appellant was given on lease the premises of the Airport for performing the obligations as mentioned in the OMDA.
The relevant portion of the Consent Award was to the following effect Respondent shall pay to the Claimant, the entire actual amount towards a Service Tax b Interest on Service Tax, and c Penalty on Service Tax as may be imposed by the Government and or relevant authority in relation to the invoices raised by DIAL on Alpha Airport Retail Private Limited under the Agreement within 7 days of such imposition.
In pursuance of its business and operation at the Airport, the appellant entered into an agreement dated 09.11.2006 whereby licensees named therein were granted a licence to set up and operate duty free shops within the airport premises.
Thereafter section 65 105 zzm of the Finance Act, 1994 was amended with effect from 01.07.2010 and section 65 105 zzzz of the Finance Act, 1994 was also amended with retrospective effect from 01.06.2007.
Around this time the disputes between the appellant, respondent number5 and the holding companypany of respondent number5 were settled and an arbitration award was passed with companysent on 30.03.2011 which recorded that the service tax, interest and penalty, if any, on the transaction between the appellant and respondent number5 was liable to be paid by respondent number5 in terms of said award.
The High Court left this question to be decided along with the main writ petition.
In view of the amended clause 65 105 zzzz , service tax was levied retrospectively from 01.06.2007 on renting of the immovable property.
The aforesaid application was disposed of by the High Court directing Respondent No.5 to furnish the bank guarantee in the sum of Rs.42,36,52,066/ in favour of the Registrar General of the High Court for securing the amount as numbere of the Directors of Respondent No.5 was within the jurisdiction of the High Court and as Respondent No.5 had numberassets in this companyntry.
As regards the liability to pay the companyts for obtaining the bank guarantee furnished by Respondent No.5 it observed that the appellant was fully aware and had companysented to the arrangements as recorded in the award dated 30.03.2011 and as such it was number open for the appellant to seek that Respondent No.5 deposit the entire amount of service tax as the same was companytrary to the companysent award dated 30.03.2011.
It was the companytention of Respondent No.5 that the insistence on the part of the appellant that Respondent No.5 must deposit the tax or furnish the bank guarantee was companytrary to the terms of the Arbitration Award and thus the companyts in respect of such bank guarantee which were to the tune of Rs.1.06 crores were liable to be paid by the appellant.
While these demands were raised, the appellant asserted that the liability was that of respondent number5.
The High Court by its order dated 23.06.2010 extended the interim order passed in similar matter in favour of respondent number5 to the effect, In the meanwhile there shall be numberrecovery of service tax from the petitioner in respect of renting of immovable property alone.
After the aforesaid interim order dated 23.06.2010 was companyfirmed till the disposal of the writ petition, the appellant preferred CM No.7343 of 2012 for modification of the order dated 23.06.2010 seeking following reliefs Modify the interim order dated 23.06.2010 and pass an order directing the Petitioner to deposit the amount payable towards Service Tax, interest and penalty before this Honble Court or to furnish a bank guarantee in favour of the Applicant, Delhi International Airport Ltd, or the Union of India of an amount of Rs.42,36,52,066/ companyprising of Rs.17,74,24,866 as service tax payable and Rs.6,88,02,334/ as interest till date and Rs.17,74,24,866 towards penalty and to companytinue to deposit periodically before this Honble Court amounts towards interest accruing on the that service tax, till the disposal of the petition or periodically increase bank guarantee in favour of the Applicant in respect of the said amounts For such further and other orders, directions and reliefs as the nature and circumstances of the case may require.
The aforesaid writ petition No.4274 of 2010 preferred by Respondent No.5 was finally heard by the High Court which held that the transaction between the appellant and Respondent No.5 regarding letting out of immovable property would number fall within the taxable service of airport services under clause zzz of Section 65 105 prior to 01.07.2010.
Respondent No.5, however, filed CM No.2222 of 2013 seeking modification of the aforesaid order dated 05.11.2012.
It was further observed that despite having such Consent Award in its favour, the appellant insisted on Respondent No.5 securing it by a bank guarantee and as such it is the appellant who must bear the companyt for the bank guarantee furnished by Respondent No.5.
Thereafter Respondent No.5 herein was incorporated and a settlement agreement dated 07.02.2008 was signed whereby licence agreement dated 09.11.2006 was numberated in favour of Respondent No.5.
During the pendency of said petition, the appellant again vide its letter dated 28.06.2010 demanded payment of service tax from respondent number5.
Thereafter the revenue issued a demand cum show cause numberice dated 22.10.2010 to the appellant demanding service tax for the period companyering 2006 2007 to 2009 2010.
The Respondent shall make payment of the amount due towards the Tax Liability within 7 seven days of receipt of demand from the Claimant in this regard.
Uday U. Lalit, J. Leave granted.
This appeal seeks to challenge the order dated 30.07.2014 passed by the High Court of Delhi in Writ Petition No.4274 of 2010 to the extent it directed the appellant to bear the companyt for the bank guarantee furnished by the present Respondent No.5.
The appellant and the Airport Authority of India entered into an Operation, Management and Development Agreement OMDA for short dated 04.04.2006 whereby the appellant, undertook inter alia, to perform the functions of the operation, management, development and design, upgradation, modernization, finance and management of the Indira Gandhi International Airport at Delhi and to perform Aeronautical Services and Non Aeronautical Services.
