TaxTMI 
TaxTMI 
TaxTMI 
2010 (12) TMI 34
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....the contractors. The said flats are ultimately sold to the customers. Service tax is leviable as per the provisions of the Act on taxable services as defined under Section 65. Section 65 (zzzh) includes service in relation to construction of a complex. Definition of construction of a complex under Section 65(30a) refers to construction of a new residential complex and other activities mentioned therein. Residential complex is defined under Section 65(91a) as comprising of buildings, common areas and other facilities. As per the impugned circular, service tax is leviable on the builders even when they enter into an agreement for sale and receive payment without issuance of completion certificate. As per explanation added to Section 65(zzzh),....
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.... residential complex or a part thereof; or (b) Completion and finishing services in relation to residential complex such as glazing plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fitting and other similar service or (c) Repair, alteration, renovation or restoration of or similar services in relation to 'residential complex'. Section 65(91a): "residential complex means any complex comprising of - (i) a building or buildings, having more than twelve residential units; (ii) a common area and (iii) any one or more of facilities or services such as park, lift, parking space, community h....
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....t derived its authority from the residuary Entry 97 of the Union List for levying tax on services. The legal backup was further provided by the introduction of Article 268-A in the Constitution vide the Constitution (Eighty-eighth Amendment) Act, 2003". 7. The scope of legislative entry cannot be taken to be limited by narrow interpretation. The entries in the lists being merely topics or fields of legislation, they must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. The words and expressions employed in drafting the entries must be given the widest-possible interpretation. A power to legislate as to the principal matter specifically mentioned in the entry shall also include withi....
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....several decisions thereafter including in Imagic Creative (P) Limited v. CCT, (2008) 2 SCC 614. Parameters applied to Entry 92C read with Entry 97 of List I are different from those applied to Entry 54 List II. Taxation power of the Union Legislature extends to any matters not covered by taxing entries in List II and is not limited by specified entries. As held in T.N.Kalyana Mandapam Association v. Union of India, (2004) 5 SCC 632 that service tax is tax on service and not on service provider. Quantification of tax should not be confused with the nature of tax. In Union of India v. Bombay Tyre International Limited, (1984(1) SCC 467 , it was observed:- "13. While the levy in our country has the....
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...., while the measure of the tax may be assessed by its own standard. It is true that the standard adopted as the measure of the levy may indicate the nature of the tax but it does not necessarily determine it. The relationship was aptly expressed by the Privy Council in Re, A Reference under the Government of Ireland Act , 1920 and Section 3 of the Finance Act ( Northern Ireland ), 1934, , ILR 1936 AC 652, when it said: "... It is the essential characteristic of the particular tax charged that is to be regarded, and the nature of the machinery - often complicated - by which the tax is to be assessed is not of assistance, except insofar as it may throw light on the general character of the ta....
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....racter of the impost but its effect must be weighed along with and in the light of the other relevant circumstances...." It is apparent, therefore, that when enacting a measure to serve as a standard for assessing the levy the Legislature need not contour it along lines which spell out the character of the levy itself. Viewed from this standpoint, it is not possible to accept the contention that because the levy of excise is a levy on goods manufactured or produced the value of an excisable article must be limited to the manufacturing cost plus the manufacturing profit. We are of opinion that a broader based standard of reference may be adopted for the purpose of determining the measure of the levy. Any standard which maintains a nexus wit....