residential complex

[a k subramanian]

one of our clients who sells his own lands to the parties by a composite agreement  ( lands are registered first) and by the same agreement he builds residential houses to the buyers of the lands. He collects the proceeds in stages. Once the construction work is completed he hands over the house key to the buyer.

He is now ordered to pay service tax under residential complex services.

We are explaining the dept that though he is developing more than 12 residential houses, yet he is not liable to pay service tax as he is a builder and he without engaging any person develops the buildings, by virture of master circular of the department 96/7/2007 (which clearly spells out that developers are not service providers if they don't engage any separate contractors for developing the houses) is not liable for service tax.

The dept is not accepting him as the developer.

We have also cited the budget 10-11 proposals that .. builders who collect the proceeds in peicemeal are also liable to service tax which implies  that until then they are not liable for service tax.

 

any similar cases may kindly be discussed

a k subramanian

Chartered Accountant

[CAGOPALJI AGRAWAL]

Dear Surender Ji

May please clarify more authoritatively.

AI Summary

Service tax liability for residential complex services challenged where builder develops without contractors; department disputes developer status. Whether Service Tax applies to a seller who registers land transfers and, under a composite agreement, constructs residential houses himself with staged payments is contested: revenue treats it as residential complex services while the taxpayer relies on the master circular exemption for developers who do not engage separate contractors and on the budget proposal history to argue prior non-liability.