By S A Ishaqui
Hyderabad,Feb. 28: The Andhra Pradesh High Court is hearing a case on whether rent received from buildings furnished with air conditioners, computers and other equipment comes under the purview of Value-added Tax.
The issue came up before the High Court after the commercial tax department slapped a notice for Vat of Rs 41 lakh on iLabs Hyderabad Technology Centre, which has leased out its building to various information technology and ITeS firms.
According to the commercial tax department, the lease rents received by iLabs are tax liable under the Vat, 2005.While hearing the petition filed by iLabs, a division bench comprising Chief Justice Anil R. Dave and Justice Ramesh Ranganathan wondered whether a house fitted with ceiling fans would also come under the purview of Vat.The bench then said it would look into the case in detail before passing an order.
The commercial tax department argued that the company had received income from operations and maintenance charges and, therefore, it comes under the definition of the dealer under the Act and was liable to pay Vat apart from the Service Tax.
The petitioner, however, cited the Himachal Pradesh vs Associated Hotels case in which the Supreme Court said that when a customer used a fan in the room of a hotel which was allotted to him, there was no sale of electricity and neither had he hired the fan. So the transaction could not be split into two parts, the Supreme Court had held.
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