service tax on commercial complex joint venture

[JAGANATHAN KUMARAVEL]

Whether service tax is applicable on commercial complex consturction under joint venture agreement.  The owner of the land enteres into an agreement with the builder for making available his land on which commercial complex will be constructed.  The construction expenses are met by the builder and the  built complex will be shared between the land owner and the builder in the agreed proportion.

 

[Radha Arun]

Please see the latest circular, dated Feb 10, on this issue. CBEC clarifies that if the land / development rights were received by the builder before the completion certificate of the building, service tax will be payable on the flats given by the builder to the land owner.

[NEERAJ KUMAR, RANCHI]

Yes service tax is definitely applicable on the services as mentioned by you. For ascertaining value reccent circular no.151 dated 10.02.2012 may be referred.

AI Summary

Service tax on construction: taxable when builder transfers flats to landowner in exchange for land or development rights before completion.
Service tax applies where a builder receives land or development rights before the building completion certificate and transfers flats to the landowner as consideration; such transfers constitute taxable services and service tax is payable, with valuation and timing guidance provided by the departmental circular referenced in the commentary.