Leviability of Service Tax on land developers

[Meenakshi Kapoor]

Is service tax leviable on land developers who are engaged in selling plots after land levelling, road construction etc.

[Surender Gupta]

There is no service tax on selling activity. If a land developers who are engaged in selling of plots after land levelling, road construction etc. is not liable to service tax.

[Guest]

The question here is that whether land developer is providing any service to the buyers of the land/plots. The answer is no because he is merely selling developed plots. However if the developer of the land engages an outside party to get the work of the site formation and clearance done then a question may arise whether he (developer) is receiving the taxable service of site formation and clearance from such outside party. This will depend upon the facts of the case. But certainly the land developer is not liable to pay any service tax under the category of site formation or ny other taxable service. One cannot provide service to oneself.

AI Summary

Service tax on land development: selling developed plots is not taxable; external contractors may create taxable receipt depending on facts. Selling developed plots is a sale, not a taxable service, so a developer who only sells plots after performing land levelling and road construction is not liable to service tax; if an external contractor performs site formation or related works, whether the developer is the recipient of a taxable service depends on the factual arrangement, since one cannot provide a taxable service to oneself.