14% Service Tax on Liquor Makers – Delhi High Court Refuses to Stay

Delhi High Court
While considering the plea filed by the liquor companies seeking an interim stay on the May 19 notification to ensure that the tax was not levied, Delhi High Court has refused to stay a Government Notification which brings into force from June 1 the levy of 14 per cent service tax on manufacture of alcohol on contractual basis.

Petitioners challenged the amendments made to the Finance Act 2015 by which service tax is going to be levied on those who manufacture alcohol for human consumption on “job-work basis”.

However, bench of justices Badar Durrez Ahmed and Sanjeev ┬áSachdeva said, while disagreeing the contentions of the petitioners observed that, “prima facie there is a service. There is a scent of service.”

Though the Stay was refused, Court issued notice to the Centre and city government and sought their responses on the liquor makers’ plea which also contended that the government cannot levy service tax on them as it fell under the ambit of the states.