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.

AI Summary

Builder's Service Tax Liability Clarified: Contractor Must Pay Tax on Entire Project Under 'Work Contract' Category. In a collaboration between a landowner and a builder, where the builder develops a commercial property and retains half the built-up area for sale, there is a question about service tax liability. The arrangement is more than a simple construction contract, making the builder a de facto owner of his portion. The builder pays service tax to contractors hired for construction services. The response clarifies that under the 'work contract' category, the contractor is liable for service tax on the entire project, regardless of how consideration is received.