Complex Construction Service

[Manoj Sharma]

Dear Sir

BRIEF FACTS

X  Ltd. is engaged in Real estate projects viz .  Construction/ development of buildings including independent villas , high rise buildings.

X  Ltd.  has some plots in “Z Coloney”  and having plans to construct high end independent villas on some of them.

The Z  Coloney  is promoted by Y  Ltd and its associate companies ( incl X Ltd) and licences for developing colonies have been granted by Town & Country Planning,  to Y Ltd and its associates.

The “Z Coloney” has following features:

a)     More than 100 individual villas / residential units

b)     Shopping Complex, School, hospitals etc

c)     Colony Roads

 

Each associate company is constructing and selling its own villas in its company name and each villa has different lay out plan.

 X Ltd. has entered agreements with intended buyers to construct independent villas and sell it on ownership and composite (plot plus Villa) basis.

i)     The Agreed selling  price includes internal development charges ( IDC) for laying of Road, water lines, sewerage  and external development charges (EDC)

ii)    Each Villa has different layout plan

 Whether Service Tax is applicable under Complex Construction Service ?

Also, Whether Decision given in the case of “Micro Marvel projects Ltd. Vs commissioner of CST  (2008 (9) TMI 80 - CESTAT, CHENNAI) = ( 2008)18 VST 433 is applicable in above case.

Some of our professional friends are of the view that since colony has more than 12 villas, Common facilities & approval from authority , service tax is applicable whereas, some friends have view that since Villa has independent lay out and every villa is different then it is single dwelling unit and main condition of 12 dwelling units not fulfilled service tax is not applicable.

 Kindly accord your view in the light of professional experience.

Regds

Manoj

AI Summary

Debate on Service Tax Applicability for X Ltd's Villas in Z Colony: Complex Construction Service or Single Dwelling Unit? X Ltd. is involved in real estate projects, constructing high-end independent villas in 'Z Coloney,' which features over 100 villas, a shopping complex, school, and hospitals. The company has agreements to sell villas on a composite basis, including internal and external development charges. There is a debate on whether service tax applies under Complex Construction Service. Some argue that because the colony has more than 12 villas and common facilities, service tax is applicable. Others believe that since each villa is independently designed, it qualifies as a single dwelling unit, exempting it from service tax. CA. Surender Gupta opines that service tax should be levied.