Availment of abatement - Notification No. 18/2005

[SHANTI NARAIN]

Dear sir, one of our client cover under service of construction of residential complex. Doubt have arisen regarding the valuation of service tax. According to Notification No. 15/2005 dated 07.06.2005 the gross amount charged by service provider would not include the cost of land and stamp duty. Doubt is that whether only cost of land is exclude or proportion of profit on land also exclude. pls explain with the help of example land Rs.50 lacs, cost of construction Rs.150 lacs, Sale value Rs.300 lacs. also give alternate value if he avail the abatement of 33% according to Notification No. 18/2005 dated 07.06.2005

[Surender Gupta]

In my view, your question needs to be seen afresh. Where you are selling the constructed complex, where is the question of service tax. You may get the complex constructed from someone else, in that the contrator is liable to pay service tax. But, where you are the owner of land and sell the complex or flats after construction, there should not be any service tax. Kindly provide more details, if you still thinks that service tax is leviable on your activity where the facts are different as per my understanding.

AI Summary

Service tax valuation: sale by landowner not ordinarily taxable, contractor liable and abatement may apply. Query asks whether profit on land is excluded from taxable gross amount under Notification No. 15/2005 and requests alternate valuation if abatement under Notification No. 18/2005 is availed. The reply states that an owner who builds and then sells the complex is not, on the respondent's view, engaged in a taxable service, whereas a contractor who constructs for another is liable to service tax; further factual particulars are required if the roles differ.