Service tax applicability - sale of built up area

[amitosh moitra]

Upon collaboration between the owner of land and a bulder in which the builder develops the whole commercial property and gets half the built up area to sell, is there any service tax liability on either party to charge and pay any tax due to this arrangement? pls note that it is a collaboration and not a mere contract of construction given to the builder. Therefore, the builder is like a defacto owner of his portion of property. Also, for any contractor that the builder hires to construct the entire property, he is paying service tax to the contractor on the services rendered.

[Guest]

Based on your query, contractor would be liable to pay service on the entire project under the new category "work contract". Manner in which consideration is received is not relevant factor to decide the tax ability of a project.

AI Summary

Service tax on work contract: contractor liable for tax on entire construction project despite collaborative ownership arrangements. A collaboration where a builder develops the whole property and retains a portion is taxable as a work contract; the contractor/builder is liable to pay service tax on the entire project and the manner in which consideration is received is not relevant to determine taxability.