Who Pays Service Tax?

[Guest]

In a JDA for land development who has to pay Service Tax on the flats given to the landowner--The Developer or Landowner?

[Himansu Sekhar]

The developer, Board has issued a circular in this regard.

[Mr Rao]

Dear sir,

Handing over of flats to Land Owner is treated as service provided by Developer to Land owner and hence service tax is liable to be paid by Developer. I endorse the views of shri Himanshu ji.

[Himansu Sekhar]

Thank you sir

[Guest]

I thank both the contributors for their clarification. Here a builder/developer is trying to cheat me.

[KASTURI SETHI]

Ultimately indirectly burden is on consumer.

[Guest]

In case the landowner does not sell these flats but holds them on for himself will that change the situation in any way?

[Ganeshan Kalyani]

I agree with Sri Kasturi Sir ' view. Ultimately the tax burden in on the customer.

[Himansu Sekhar]

Even if the landowner keeps the flat, the developer will pay the tax

[Ganeshan Kalyani]

I agree with Sri Himansu Sir 's view.

[Himansu Sekhar]

Thank you sir

AI Summary

Service tax liability: developer must pay when flats are handed to landowner; ultimate incidence falls on consumers. The handing over of flats to the landowner under a joint development agreement is treated as a service provided by the developer to the landowner; accordingly, the developer is liable to pay service tax on those flats, and this liability remains even if the landowner retains the flats for personal use, although the economic burden typically falls on consumers.