Liability of service tax - Contractor

[DINESH MITTAL]

In the service tax, construction of resdidential complex 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 says: 'personal use' includes permitting the complex for use as residence by another person on rent or without consideration. Now, in this case, if contractor construct the residential houses of a Ltd. Co., which is used by the Co. for the residence of their employees on rent or not, whether the contractor is liabile for service tax or not. Whether contractor is liable for service tax under work contract service or not.

[Rama Krishana]

A company though a person for the purpose of taxation, but can not be a natural person like an Individual. Personal use must be constructive and a company can not by any means say that a particular premises for its personal residential user. The company is situated in a registered office and nowhere else. Therefore, in my view, the company can not claim the benefit of non inclusion clause under section 65(91a) of the service tax provisions.

AI Summary

Contractor Liable for Service Tax on Residential Construction for Company Employees; No Exemption Under Section 65(91a). A query was raised regarding the liability of a contractor for service tax when constructing residential houses for a company, which are used by the company's employees as residences. The question focused on whether such construction falls under the service tax exemption for personal use. The response clarified that a company, while considered a person for taxation, is not a natural person and cannot claim personal use of a residential complex. Therefore, the company cannot benefit from the exemption under section 65(91a) of the service tax provisions, implying the contractor may be liable for service tax.