Service tax on property under construction

[M. R. Nadkarni]

Bombay High Court has issued stay order on the subject. What are the duties and responsibilities of the builder with respect to payment of service tax collected.

[Surender Gupta]

Generally stay order is issued to the applicant / petitioner of the case. If you like to take the advantage of the stay order in other case, you may submit a petition before the high court referring to earlier decision and get the stay in your favor also. Regarding correction and recovery, the stay order is not a final decision and you should go cautiously that in case the final decision is against the assessee, it is difficult to recover the amount of service tax from the client. Therefore, decision is based on case to case basis.

AI Summary

Service tax on construction: stay orders benefit only named parties, builders should seek their own stay and act cautiously. A stay order ordinarily benefits only the party to whom it is granted; other builders should seek their own relief by petitioning the court. A stay is interim and not a final decision, so builders must exercise caution in collecting or retaining service tax billed to clients because an adverse final decision may make recovery from clients difficult; risk allocation requires case-by-case assessment.