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

AI Summary

Client Ordered to Pay Service Tax on Staged Payments for Residential Developments; Disputes Exemption as Developer Under Circular A client sells land through a composite agreement, registering the land first and then constructing residential houses for buyers, collecting payments in stages. Upon completion, the house keys are handed to buyers. The client has been ordered to pay service tax under residential complex services. They argue they are exempt as a developer under a departmental circular, which states developers not engaging separate contractors are not service providers. The department disagrees, citing a budget proposal implying liability for service tax when proceeds are collected in stages. The client seeks similar case discussions for further clarification.