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

Personal use exclusion in service tax: companies cannot claim residential exclusion for employee housing, affecting contractor liability. Whether constructing residential housing for a company qualifies for the 'personal use' exclusion from residential complex construction; the reply finds that a company cannot be treated as a natural person for that exclusion, so premises used to house employees do not attract the non inclusion and the contractor's activity falls within work contract/service tax liability principles.