Self-construction for eventual sale is not a taxable service when no service provider-recipient relationship exists.

Construction by a developer on its own land for residential plots, followed by sale of the completed units to buyers, was not treated as a taxable service under service tax law because the essential service provider-service recipient relationship was absent. The amounts received from prospective buyers were characterised as sale consideration for the completed property, not consideration for any service. The reasoning accepted by the Commissioner (Appeals) was that self-construction for eventual sale, without a service relationship, does not fall within service tax. The activity was therefore not exigible to service tax, and the Revenue's appeal failed.

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Issues: Whether construction activity undertaken by a developer on its own land for residential plots, later sold to prospective buyers, gives rise to a taxable service under service tax law.

Analysis: The construction was carried out by the respondents on their own land and the completed units were sold to buyers. In such a situation, the essential relationship of service provider and service recipient was absent. The consideration received from prospective buyers was treated as sale consideration for the completed property and not as consideration for any taxable service. The reasoning adopted by the Commissioner (Appeals) was in line with the governing principle that self-construction for eventual sale, without a service relationship, does not amount to a taxable service.

Conclusion: The activity was not exigible to service tax and the Revenue's appeal failed.

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