Service tax applicability

[SARAVANAN RENGACHARY]

Land owner enter an agreement with builder for building apartments. As a consideration, builder agrees to allocate few fully furnished flats to the land owner on free of cost.

please let us know the applicability of service tax.

regards

Saravanan.

[KASTURI SETHI]

It is not free of cost. Service Tax is applicable on the value of a few fully furnished flats under Works Contract Service.

[Vijay kumar]

Service tax is applicable in such cases since a taxable service i.e. construction service is involved. Valuation and point of taxation have been clarified by CBEC vide Circular No.151/2/2012 dated 10.2.2012, which is reproduced below:

Circular No. 151 /2 /2012-ST

F.No.332/13 /2011-TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

(Tax Research Unit)

 

New Delhi, 10^th February, 2012

To

Chief Commissioner of Customs and Central Excise (All)

Chief Commissioner of Central Excise & Service Tax (All)

Director General of Service Tax

Director General of Central Excise Intelligence

Director General of Audit

Commissioner of Customs and Central Excise (All)

Commissioner of Central Excise and Service Tax (All)

Commissioner of Service Tax (All)

 

 

 

[Ganeshan Kalyani]

Vijay kumar Sir's reply is now supported by TRU vide F.No.354/311/2015 dated 20.01.2016 stating that Circular No. 151/2/2012-ST dated 10.02.2012 will prevail over Education guide. Hence I agree with Vijay Kumar Sir's reply.

[Mahir S]

Yes sir, agree to the Board Circular , as rightly quoted by Vijay Kumar ji.

[KASTURI SETHI]

Thanks to Sh.Ganeshan Kalyani, Sir. for latest information. Agreed with all the experts on this issue.

[Ganeshan Kalyani]

Thanks Kasturi Sir for acknowledging my reply.

[Suryanarayana Sathineni]

The views expressed by the learned friends are very clear. You may pl. refer the recent Board circular issued last week for clarification more specifically on valuation in the present scenerio.

Regards

Surya

AI Summary

Service Tax Applicable on Fully Furnished Flats Received as Consideration in Land Agreement, Clarified by Circular No. 151/2/2012-ST. A discussion on service tax applicability arose when a landowner entered an agreement with a builder to receive fully furnished flats as consideration for land, questioning if these flats are free of cost. Multiple respondents clarified that service tax is applicable under Works Contract Service because the construction service is a taxable service. They referenced Circular No. 151/2/2012-ST from the Central Board of Excise & Customs, which provides guidance on valuation and taxation. The consensus among participants was that the service tax is indeed applicable, supported by recent circulars and expert opinions.