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Construction of Residential Complex Services [Sec 65(105)(zzzh)]
Effective upto 30th June, 2012
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Landmark Service Tax Judgment - Construction of Residential Complex Services

INTRODUCED: With Effect From 16th June 2005
 
Contents
Scope
Exemption
Clarification
Relevant Notifications / Circulars
Landmark Judgements
Accounting Code
Service Tax 00440334
Interest
00440335
Penalty 00441438
 
DEFINITION:

According to Section 65 (105) (zzzh), any service provided or to be provided to any person, by any other person, in relation to construction of complex is a ‘taxable service’

Explanation.—For the purposes of this sub-clause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorised by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer;

According to Section 65 (30a) “construction of complex” means —

construction of a new residential complex or a 

(a) part thereof; or completion and finishing services in relation 

(b) to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or repair, alteration, renovation or restoration 

(c) of, or similar services in relation to, residential complex;

According to Section 65 (91a) “residential complex” means any complex comprising of—

(i) a building or buildings, having more than twelve residential units;

(ii) a common area; and

(iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system,

located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person.

Explanation. — For the removal of doubts, it is hereby declared that for the purposes of this clause, —

(a) “personal use” includes permitting the complex for use as residence by another person on rent or without consideration;

(b) “residential unit” means a single house or a single apartment intended for use as a place of residence;

 
SCOPE:
TOP

This service would generally cover construction services in respect of residential complexes developed by builders, promoters or developers. Such residential complexes are normally constructed after obtaining approval of the statutory authority for their layout. For the purpose of this levy, residential complex means,

­(i) a building or buildings located within a premises;

(ii) total number of residential units within the said premises are more than twelve;

(iii) having common area;

(iv) having common facilities or services; and

(v) layout of the premises has been approved by the appropriate authority.

Common area would include roads, staircases and other similar areas where residents of the residential complex have easement rights. The list of facilities prescribed is merely illustrative and not exhaustive. Some residential complexes may also contain other facilities such as market or shopping complex, schools, security, banks, gymnasium, health club, sports facilities, power back up and the like.

Repair, alteration, renovation or restoration of residential complexes would also be liable to service tax. Such services provided in relation to residential complexes which are in existence before the levy has come into force and are not new, would also be taxed.

Residential complex constructed by an individual, which is intended for  personal use as residence and  is constructed by directly availing services of a construction service provider, is also not covered under the scope of the service tax and not taxable.

 
SERVICE TAX EXEMPTIONS:
TOP

(a) Small service providers whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs. 10,00,000/- (Service Tax Notification No. 08/2008-S.T., dated 01.03.2008)

(b) Services provided to the United Nations or International Organisations

(c) Services provided to Special Economic Zones (SEZ) units (including unit under construction) and SEZ developers

(d) Services which are exported as per ‘Export of Services’ Rules

(e) Services provided for official or personal use of foreign diplomatic missions and family members of diplomatic missions.

(f) Services provided by Reserve Bank of India

(g) Out of total value of service provided proportionate value of goods and material provided by the Service Provider

 
SERVICE SPECIFIC EXEMPTION:

Construction of complex consisting of 12 or less than 12 residential units shall not be considered as construction of residential complex and service tax is not levied

Taxable value of Construction of Residential Complex Service shall be exempt in excess of 33%. In other words abatement of 67% is available.

 
CLARIFICATION:
TOP

ISSUE 1: Whether service tax is liable under construction of complex service [section 65(105)(zzzh)] on builder, promoter, developer or any such person,-

(a) who gets the complex built by engaging the services of a separate contractor, and

(b) who builds the residential complex on his own by employing direct labour?

ANSWER 1:

(a) In a case where the builder, promoter, developer or any such person builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of the said residential complex, the contractor in his capacity as a taxable service provider (to the builder / promoter / developer / any such person) shall be liable to pay service tax on the gross amount charged for the construction services under ‘construction of complex’ service [section 65(105)(zzzh)].

(b) If no other person is engaged for construction work and the builder / promoter / developer / any such person undertakes construction work on his own without engaging the services of any other person, then in such cases,-

(i) service provider and service recipient relationship does not exist,

(ii) services provided are in the nature of self-supply of services.
Hence, in the absence of service provider and service recipient relationship and the services provided are in the nature of self-supply of services, the question of providing taxable service to any person by any other person does not arise.

 
RELEVANT SERVICE TAX NOTIFICATIONS:
TOP
  Service Tax Notification No. 29/2010-S.T., dated 22-06-2010
Service Tax Notification No. 28/2010-S.T., dated 22-06-2010
Service Tax Notification No. 25/2007-S.T., dated 22-05-2007  Exemption regarding constuction of residential complex service.
Service Tax Notification No. 01/2006-S.T., dated 01-06-2006. To prescribe effective rate of duty.
 
RELEVANT SERVICE TAX CIRCULARS/INSTRUCTIONS/TRADE NOTICES:
Service Tax MF (DR) Order No. 01/2010, dated 22-6-2010
Service Tax  D.O.F. No. 334/1/2010 TRU, New Delhi, dated 26-2-2010
Service Tax Circular No. 108/02/2009-S.T., F. No. 137/12/2006-CX-4, dated 29-1-2009
Service Tax Circular 96/7/2007 dated 23-08-2007, Clarification of Scope.
 
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Case Laws Related

  • STO 2013 CESTAT 1236
  • Construction of Complex: Demand: Stay: Abatement of 67% not given: Appellants agreed that they were required to pay service tax on at least 33% of value: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 773
  • Construction of Complex: Explanation inserted by the Finance Act. 2010 brings within the fold of taxable service a construction service provided by the builder to a buyer where there is an intended sale between the parties whether before, during or after construction; that the 'Explanation' was specifically legislated upon to expand the concept of taxable service; that prior to the explanation, the view taken was that since a mere agreement to sell does not create any interest in the property and the title to the property continues to remain with the builder, no service was provided to the buyer; that the service, if any would be in the nature of a service rendered by the builder to himself; that the explanation expands the scope of the taxable service, provided by builders to buyers pursuant to an intended sale of immovable property before, during or after the construction and therefore the provision is expansive of the existing intent and not clarificatory of the same; and is consequently prospective.

  • STO 2013 CESTAT 782
  • Construction of Residential Complex: Demand: Stay: Residential complex to be used by Police Housing Corporation for personal use by their staff: Pre-deposit waived.

  • STO 2013 CESTAT 1132
  • Construction of Residential Complex: Demand: Stay: the Commissioner has to consider the Board's Circular. No.151/2/2012-S.T. dated10.02.2012 which is in favour of the appellant and also benefit of 67% abatement which has not been extended which appears to be available to the appellant and also the Commissioner has not taken into account the service tax actually paid by appellant from 01.07.2010 onwards: directions issued for partial pre deposit and matter remanded back to Commissioner.

  • STO 2013 CESTAT 793
  • Construction of Residential Complex: Whether taxable under Works Contract service prior to 01.06.2007: Directions issued for pre deposit.

  • STO 2013 CESTAT 395
  • Construction of residential complex: Demand: Stay: Appellant collected the amount from flat owners under Section 5 of the Maharashtra Ownership of Flats (Regulation) Act, 1963, as the appellant was obliged to discharge property tax, water and electricity tariff etc. on behalf of the flat owners and the appellant has undertaken these activities in the capacity of an executor. Therefore, the appellant has not rendered any management, maintenance or' repair services: Pre deposit waived.

  • STO 2013 CESTAT 532
  • Construction of Residential Complex: Demand: Stay: entire project was constructed by the applicant as a common project: Following directions issued in another similar case for pre deposit, directions issued in this case also for partial pre deposit.

  • STO 2013 CESTAT 820
  • Construction of Residential Complex: Maintenance or Repair Service and Architect Service: Amount partly deposited: Pre deposit waived for balance amounts on the ground that maintenance charges were returned to flat owners/society after period of 1-3 years.

  • STO 2013 CESTAT 690
  • Construction of Residential Complex: Demand: Stay: Applicant is the owner of the land and construction was undertaken by a joint development agreement with M/ s. Vaikunth Housing Ltd : Applicants deposited an amount of Rs.42,32,330/ - which has been appropriated against the demand: Pre deposit for balance amounts waived.

  • STO 2013 CESTAT 564
  • Construction of Residential Complex: Demand: Stay: Appellants paid service tax at the time of delivery of flats: Directions issued for pre deposit.

  • STO 2013 CESTAT 538
  • Construction of Residential Complex: Demand: Stay: Appellant could not produce documentary evidence to show valuation of different projects separately, hence, apprehension by Commissioner prima facie proper: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 653
  • Construction of residential Complex: Appellants constructed Tsunami houses: Appellants collected major amount of service tax, but did not deposit: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 473
  • Construction of Residential Complex: Demand: Stay: Prima facie the legal question of divisibility of the contract into sale of materials and for providing construction service seems to be supported by Article 366 (29-A) (b) of the Constitution of India and the judgment of the Apex Court: Even if this question is answered in favor of the appellants the question arises as to whether such division has been done in an arbitrary manner or based on evidences and if so what type of evidence. An assessee cannot choose to pay either VAT or Service Tax as he pleases (obviously who will choose to pay that tax for which the rate is lower) and discharge of VAT on a particular value cannot be conclusive proof that the value of material involved corresponded to the value on which VAT was paid: Directions issued for partial pre deposit. 

  • STO 2013 CESTAT 477
  • Construction of Residential Complex: Demand: Stay: the 'exclusion clause’ would apply in respect of a complex constructed by a person which is intended for personal use as residence by such person : In the present case, it appears from, the Sale Deed and Construction Agreement that the applicant proposed to develop the property into a multi-storeyed residential complex not for personal use. Prima facie, it is not a case that the applicant constructed the complex for personal use: directions issued for partial pre deposit.

  • STO 2013 CESTAT 43
  • Construction of Residential Complex: After taking into consideration the duplication in demand on account of Cenvat credit and abatement of 67% and the fact that appellants have paid certain amount: Directions issued for partial pre deposit.

  • STO 2013 CESTAT 39
  • Construction of Residential complex: Demand: Stay: Not much merit in the argument regarding time bar because at no stage the Board clarified that if land is sold first and then construction is undertaken, there is no service tax liability: Directions issued for making pre deposit.

  • STO 2012 CESTAT 1052
  • Construction of Residential Complex: Demand: Stay: Service tax can be demanded under 65(105)(zzzh) only if the building concerned has more than 12 residential units in the building and levy will not apply in cases where in one compound has many buildings, each having not more than 12 residential units.

  • STO 2012 CESTAT 1104
  • Commercial Construction: Construction of Residential Complex: Appellants deny having constructed any residential complex, evidences not produced before lower authorities: Matter remanded.

  • STO 2012 CESTAT 877
  • Construction of Residential Services: Construction of flats on own land will not amount to providing services to the buyers.

  • STO 2012 CESTAT 653
  • Construction of Residential Complex: Respondents taking advances from prospective buyers: As per explanation inserted by Finance Act, 2010 respondents liable to pay tax: Tribunal in other cases holding that such explanation not retrospective: Revenue’s appeal rejected.

  • STO 2012 CESTAT 596
  • Construction of Residential Complex: Stay: the residential units were constructed as two-storeyed blocks, each consisting of less than 12 units. It is debatable as to whether these complexes can be considered to be residential complexes for the purpose of levy of service tax: Stay granted.

  • STO 2012 CESTAT 575
  • Construction of residential complex: Complex constructed was for residence of tribal girls and the construction was done for MP Housing Board, Ujjain: Stay granted from recovery on the ground that in similar matters in past stay has been given.

  • STO 2012 CESTAT 559
  • Construction of Complex: Builder constructing flats on its own land and after completion of construction sale deed entered with the buyers for sale of flats: Prior to amendment by Finance Act, 2010: Services not taxable.

  • STO 2012 CESTAT 503
  • Construction of Complex: Demand: Stay: Appellants raising arguments in piecemeal: No case made out for waiver from pre deposit: Directions issued for pre deposit. 

  • STO 2012 CESTAT 395
  • Construction of Residential Complex: Stay : Appellants entered into agreement for sale of land and flat was to be constructed and handed over to them: Prima facie case not found: However, looking to contradictory Circulars issued by the Board, limitation found inapplicable: Considering the financial hardships urged: Pre deposit ordered.

  • STO 2012 CESTAT 1128
  • Construction of Residential Complex: “residential complex” as given in section 65 (91a) will apply only to cases where one building has more than twelve flats or will extent to cases where different buildings in the same compound totally having more than twelve flats : Matter remanded.

  • STO 2012 CESTAT 393
  • Construction of Complex Service: Limitation : Stay: For the same period earlier also demand issued for the said service was dropped and order accepted by the department: waiver from pre deposit granted.

  • STO 2012 CESTAT 338
  • Construction of complex: Service tax can be demanded under 65(105)(zzzh) only if the building concerned has more than 12 residential units in the building and such levy will not apply in cases where in one compound has many buildings, each having not more than 12 residential units.

  • STO 2012 CESTAT 241
  • Construction of Complex: Advance payments recovered prior to 1.7.2010: Demand confirmed on the ground that explanation is retrospective: Stay granted on the basis of similar precedent decision granting stay. 

  • STO 2012 CESTAT 218
  • Construction of Residential Complex: Explanation made on 01.07.2010 only prospective and not retrospective. 

  • STO 2012 CESTAT 252
  • Construction of Residential Complex: Only complex having more than 12 residential units liable to be taxed.

  • STO 2012 CESTAT 1125
  • Construction of Residential Complex: Quarters for Army and WBPDCL meant for personal use: As per Board’s Circular dt. 24.5.2010 and decision in Khurana Engineering Stay granted.

  • STO 2012 CESTAT 248
  • Construction of Residential Complex: Prior to 23.8.2007 if main contractor has paid service tax, sub-contractor need not pay service tax: No bifurcation available relating to demand for both the period: Stay granted.

  • STO 2012 CESTAT 349
  • Construction of Complex: In the case of construction of a complex, which is the impugned service in this case, the contract is for providing service considering the aspect theory laid down by the Apex Court in the case of BSNL Ltd.

    Construction of flats on behalf of land owner: Considering that 18865 sq. feet of constructed area (16.46% of total constructed area) was handed over to flat owners in the case of TA Enclave and 17054 sq. feet of constructed area (55% of total constructed area) in the case of Himdari Complex was handed over to the Land Owners, it is clear that the Land Owner had engaged the Developer for construction of flats for him in a complex in his share of land, which flats could be sold by him. So the residential complex as a whole was not for personal use. The exclusion in the definition of the service is for a complex intended for personal use.

  • STO 2012 CESTAT 109
  • Construction of Residential Complex: Demand: Stay: Appellant a sub-broker, principal has already paid service tax: Financial hardship also urged: Directions issued for pre deposit.

  • STO 2012 CESTAT 142
  • Construction of Complex: Demand: Stay: Appellant constructed 15 units but none of building having more than 12 units: Unconditional stay granted on the basis of precedent decision of Tribunal.

  • STO 2011 CESTAT 216
  • Service Tax: Construction of Residential Complex Services: Classification: Pre-deposit: After hearing both sides and considering the fact that the small low cost individual houses have been built and also keeping in view the cited decision of the Chennai Bench of the Tribunal, the appellants have made out a case for waiver of pre-deposit apart from arguing that the demand is fully time barred. As such, the requirement of pre-deposit during the pendency of the appeal is waived. (para 4)

  • STO 2011 CESTAT 204
  • Service Tax: Construction of Residential Complex Services: Pre-deposit: It is unconceivable that just because the appellant received advances from the prospective buyers, the sale could not be considered as sale and would fall under services. The appellant has made out a prima facie case for the waiver of the pre-deposit of the amounts involved. (para 5)

  • STO 2011 CESTAT 205
  • Service Tax: Management, Maintenance or Repair Service: Demand: waiver of pre-deposit and stay of recovery: Works Contract could not be taxed under another head prior to 01.06.2007. Demand of service tax made is contrary to the ratio of the decisions of the Tribunal and the High Court cited by the appellant.(Para 5). Complete waiver of the dues was ordered and stay on recovery thereof pending decision in the appeal.(Para 6)

  • STO 2011 CESTAT 227
  • Service Tax: Building construction services: Demand: Pre-deposit/Stay: The appellant is directed for pre-deposit the entire amount of demand raised by the Adjudication order which have been confirmed by the first Appellate order. Finding no merit in the stay application the appellant to pre-deposit entire demands raised in the adjudication within six weeks.(Para 4)

  • STO 2010 P&H 823
  • Service Tax: Construction of Residential Complex service: Whether unconstitutional: Contention that there is no element of service of construction involved in a builder selling a flat cannot be accepted. Whether or not service is involved has to be seen not only from the point of view of the builder but also from the point of view of the service recipient. What is sought to be taxed is service in relation to construction which is certainly involved even when construction is carried out or got carried out before construction and before flat is sold.(Para 10).

    in view of circular dated 1-8-2006, issued by the CBDT, there could be no question of taxable service when a builder undertakes construction work without engaging services of any one else. The said circular will not apply when service recipient is purchaser of a flat. The levy of tax is on service and not on service provider and construction services are certainly provided even when a constructed flat is sold. Taxing of such transaction is not outside the purview of the Union Legislature as the same does not fall in any of the taxing entries of State list.(Para 11). The petition is dismissed.(Para 13).
     

  • STO 2010 CESTAT 600
  • Service Tax: Waiver of pre-deposit and stay of recovery: Commercial or Industrial Construction' Service and 'Construction of Complex' Service: Demand: The deeming provision contained in the explanation added to Section 65 (105) (zzq), and (zzzh) of the Finance Act, 1994 will have only prospective effect from 1.7.2010. Apparently, prior to, this date, a builder cannot be deemed to be service provider providing any service in relation to industrial/commercial or residential complex to the ultimate buyers of the property. Admittedly, the entire dispute in the present case lies prior to 1.07.2010. The appellant has made out prima facie case against the impugned demand of service tax and the connected penalty. The appellant paid an amount of over Rs. 64 lakhs, which stands appropriated towards the impugned demand of tax.(Para 5). In the circumstances, there shall be waiver of pre-deposit and stay of recovery(Para 6). 

  • STO 2010 CESTAT 320
  • Service Tax: Construction of Residential Complex Services: Pre-deposit: The Board has clarified that the taxable service till the execution of sale deeds would be in the nature of 'self service' and consequently would not attract service tax. This being the clarification by the Board, till date not superseded, the Revenue cannot argue against its own circular. The applicant has made out a prima facie case for waiver of pre-deposit of the amounts involved. The application for waiver of pre-deposit of the dues adjudged in the impugned order is allowed. (para 7,8)

  • STO 2010 CESTAT 199
  • Service Tax: Residential Construction Service: Remand: In the facts and circumstances of the case and taking into account the cited decision of the Tribunal in the case of Ardra Associates (Supra) and the Board’s Circular dated 29.01.2009 cited supra, the impugned order is set aside and the matter remanded to the original authority for fresh decision. The appeal is allowed by way of remand. (para 4)

  • STO 2009 CESTAT 1416
  • Service Tax: Services of constructing commercial and residential premises for the period 10.09.2004 to 31.03.2007: Works contract: Liability: The issue regarding the taxability of services rendered by applicant, prima facie seems to be contentions are one and needs to be gone in to detail. The amount already deposited by the applicant is enough deposit to hear and dispose the appeal.(Para 4).

    Balance pre-deposit waived, stay granted.

  • STO 2009 CESTAT 1187
  • Service Tax: Construction Services – Residential Complex: Scope and liability: Construction of compound wall and road would not get covered by said service category and that in any case, the number of units constructed on the plot holders of different societies does not exceed 12 units. There is force in the said plea of the appellant inasmuch as Section 65(91)(a) of Finance Act, 1994, which defines the residential complex, is to the effect that the same should not have more than 12 residential units.(Para 2).

    Stay petition allowed.
     

  • STO 2009 CESTAT 1116
  • Service Tax: "Commercial or Industrial Construction and Constructer of Complex Services" from 10.09.2004 to 31.03.2006: Scope and liability: The Adjudicating Authority in his impugned order has confirmed the entire demand on the appellant without bifurcating the amount payable by them towards the services rendered for the commercial complexes and for the residential complexes.  Circular No. 108/02/09-ST dated 29.01.2009 was not before the Adjudicating Authority. Hence, the Adjudicating Authority should consider the circular in its proper perspective and also allow the appellant to provide with the evidences as regards the services rendered towards commercial complexes and residential complexes. The impugned order is set aside and the matter is remanded back to the Adjudicating Authority. (Para 7).

    Appeal allowed by way of remand.

  • STO 2009 CESTAT 864
  • Abatement with CENVAT Credit: The taxable event which is rendering the services was completed during the period prior to 01.03.2006. For this period appellant was entitled to abatement as well as Cenvat credit. Appeal is allowed with consequential benefit to appellants.

  • STO 2009 CESTAT 422
  • Total waiver of pre-deposit of the penalties: The appellants had paid the tax due along with interest long before the issue of Show Cause Notice. Total waiver of pre-deposit of the penalties imposed and its recovery thereof pending appeal.

  • STO 2009 CESTAT 330
  • Service Tax:Construction of residential and commercial complex: Tax collected but not deposited with Government: The applicant collected service tax from their customers on the sale price whereas the sub-contractors paid service tax at the construction price of flats. The amount collected by the applicant has to be paid by themselves to the Government. Prima facie, it is found that the contractors paid less tax than the applicant collected more amount from their clients. Therefore, the submission of the Learned Advocate regarding payment of tax by the contractors against the demand of tax would be looked in detail at the time of appeal hearing.(Para 6).

    Pre-deposit ordered.

  • STO 2009 CESTAT 95
  • Service Tax: Whether the activities of "construction of residential complex" is leviable to Service Tax: Scope: The Commissioner (Appeals) passed the order following the decision of the Hon'ble Gauhati High Court in the case of Magus Construction Pvt. Ltd. - STO 2008 Gau 948 and held that in sale of flats, there is no service, no service tax. On perusal of the impugned order, there is no reason for stay of operation(Para 1).

    Revenue stay application rejected.

  • STO 2009 CESTAT 225
  • Service Tax: Construction activity: Waiver of pre-deposit: The decision in the case of Magus Construction Pvt. Ltd. Vs. UOI - STO 2008 Gau 948 is not fully applicable to the facts of the present case, as the appellants are constructing both residential and commercial complexes. Moreover, all the details which are furnished before the Tribunal now were not available before the Original Authority. The contractors are also their sister concern only. The information on the break-up of the value relating to commercial complexes and residential complexes are not available. In these circumstances, the appellant are put to terms. (Para 4).

    Pre-deposit ordered.

  • STO 2009 CESTAT 466
  • Service Tax: Construction of Residential Complex' service for the period 16.6.2005 to 31.3.2006: Stay: Taking into account the payments already made by the assessee towards the impugned demands, waiver of pre-deposit allowed(Para 1).

    Stay granted.

  • STO 2008 AAR 88
  • Construction of Residential Complex : Work Contract When the buyer of the sub-plot enters into a works contract, such a contract is not for the construction of an isolated house, but for one which will make available to the buyer, all the facilities such as a club house etc. provided for by the residential complex. Individual houses built through the works contract, therefore, have to be viewed as parts of a residential complex rather than as stand alone houses. Thus the expression “or a part thereof” occurring in clause (c) of (zzzza) of Section 65(105) squarely applies.

    Section 65A is applicable when a taxable service is prime facie classifiable under two or more sub clauses of clause (105) of Section 65
    The service provided in relation to execution of a works contract is clearly classifiable in sub clause (zzzza) of clause (105) of Section 65 and there is no other sub clause where this service could be classified. Section 65A cannot be pressed into service for determining the further categorization under the said sub-clause (zzzza).

    The value of the service component of a works contract which is chargeable to tax would be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract.

    As per the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 instead of paying service at the twelve per cent rate specified in Section 66, Rule 3(1) of the above Composition rules gives the service provider an option to discharge his duty liability by paying four per cent of the gross amount charged for the works contract.

  • STO 2008 AAR 87
  • Construction Service : The activity of building a residential unit on an earmarked plot in the Complex and making Construction thereon as per the plan, design and specifications, obtaining various permissions and providing amenities, apart from the provision of common infrastructural facilities before handing over the building to the customers would undoubtedly constitute services provided or to be provided. The fact that the ownership and possession remains with the applicant throughout the process of Construction and that the constructed residential unit can only be transferred to the booker/buyer on receipt of entire sale consideration does not have a real bearing on the question whether any services in relation to the Construction of complex are required to be rendered by the applicant.

  • STO 2008 CESTAT 85
  • Construction Services: The appellant carrying out entire construction work as developer and builder and the ready built flats are being sold. Circular No.96/7/2007-ST dt.23.8.2007 which is in favor of the appellants. Circular is by way of clarification of the law and it will apply retrospectively.

  • STO 2008 CESTAT 143
  • Construction Service: Refund: Agreement for sale of flat is entered before the construction of the flat is complete and the appellant constructed the flat, therefore, liable for Service tax. Unjust enrichment, the sale deed entered with their customer mentions the Service Tax will be paid by the purchasers of the flat. Hence, no infirmity in the impugned order rejecting the refund claim.

  • STO 2006 Kar 734
  • Service Tax: Construction of Residential Complex Service: Notification No. 1/2006 -Service Tax dated 1-3-2006 : In a notification of this nature, if the person is put to election that either he can opt for CENVAT credit of duty on service tax input services or to avail benefit under the present notification which is an option which is extended to a person which he can seek for, avail of or ignore, no grievance can be made that putting a person to such option is bad. The exemption notification always come subject to the condition to which the exemption is granted and there is no question of Courts dissecting the notification of this nature to extend the benefit but not to insist compliance of the condition for a particular assessee. (para 9,11)

    Service Tax: Construction of Residential Complex Service: Notification No. 1/2006 -Service Tax dated 1-3-2006: Discrimination: The notification has never the effect of either enhancing the tax liability of the petitioner nor does it per se discriminate against the petitioner as a concession which is subject to a condition as under the present notification, in the sense that, a person claiming benefit under one particular provision is not entitled for benefit under the other, cannot be said to be a discriminatory provision. (para 10)

    Service Tax: Construction of Residential Complex Service: Notification No. 1/2006 -Service Tax dated 1-3-2006: Legislative powers : It is for the legislature to take care of what class of persons certain benefits are extended and in what manner etc. (para 11)

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