Service Tax for the under construction Independent House for one family

[Asked by Guest]

Is it required to pay Service Tax for the under construction Independent House(for one family) purchased through the builder.. The lay out is not approved by any competent authority. However the builder is contrcuting the 36 houses(with sft of 900 to 1250) in open space bytaking individual independent house permissions within a financial year.

Thanks for the answers.

[KASTURI SETHI]

Dear Querist,

In such a situation, no exemption from Service Tax is available.This single residential unit will be part of residential complex defined in clause (zc) of Para No.2 of Notification No.25/12-ST dated 20.6.12 as amended. The definition is extracted below:-

Para No.2 : Definitions

(zc) “residential complex” means any complex comprising of a building or buildings, having more than one single residential unit;

Earlier definition of "Residential Complex" having common area, common road and common stair etc. has been omitted.

How can any residential house be constructed without approval from the Competent Authority ?

The department may treat such plan as 'manipulation' and show cause notice will be ready. If any one of the conditions is missing, even then SCN attracting demand, interest and penalty will be issued.

Do not be swayed away by any lacunae in law, if any.

[Himansu Sekhar]

The levy of Stax is not relating to the approval of the competent authority. Since your house is part of the complex, tax is leviable.

AI Summary

Service tax on residential complex applies to independent houses within a complex even without competent authority approval.
Service tax is leviable on an under construction independent house that forms part of a multi unit development under the residential complex definition in Para 2(zc) of Notification No.25/12 ST; lack of competent authority approval does not negate liability and authorities may issue show cause notices with demands, interest and penalties if exemption conditions are not met.