TaxTMI 
TaxTMI 
2009 (4) TMI 800
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....alties 2. M/s. PECCI Associates, Mangalore 385/08 (MR) (ST) 1-8-2006 to 31-3-2006 18/2008-ST JC dated 28-05-2008 Rs. 5,46,396/- with interest and penalties Brief facts of the case of Sl. No. 1. The appellant is registered with the department under the category of "Commercial or Industrial construction service" and "Construction of Complexes (residential) services". The department observed that the appellant had not paid service tax of Rs. 11,72,828/- on above two services for the period from 1-7-2006 to 31-3-2007, on the gross taxable value of Rs. 2,90,36,133/- recovered by them. It was also observed that service tax was not paid on the land value. Accordingly a Show Cause Notice was issued demanding the ....
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....nt vide Circular No. 80/10/2004-ST dated 17-9-2004 stating that the promoter/builders are not liable to tax. (e) The CBEC has also clarified vide instruction F.No. 332/35/2006-TRU dated 1-8-06 that where a builder, promoter or developer engages the contractor for construction of residential complex, the contractor shall be liable to pay service tax on the gross amount charged for construction services provided to a builder promoter or developer. That they got the building constructed through contractors who had collected service tax from them and that collection once again from them would amount to double taxation. (f) The appellant is owning the land, engaged himself the labour, buys material and execute the work. After completing th....
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....uced below : "Construction of residential complex was brought under service tax w.e.f. 1-6-2005. Doubts have arisen regarding the applicability of service tax in a case where developer/builder/promoter enters into an agreement, with the ultimate owner for selling a dwelling unit in a residential complex at any stage of construction (or even prior to that) and who makes construction linked payment. The 'Construction of Complex' service has been defined under Section 65(105)(zzzh) of the Finance Act as "any service provided or to be provided to any person, by any other person, in relation to construction of a complex ". The 'Construction of Complex' includes construction of a 'new residential complex'. For this purpose, 'residential comple....
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....e purposes of levy of service tax and hence construction of it would not attract service tax. 3. The matter has been examined by the Board. Generally, the initial agreement between the promoters/builders/developers and the ultimate owner is in the nature of 'agreement to sell'. Such a case, as per the provisions of the Transfer of Property Act, does not by itself create any interest in or charge on such property. The property remains under the ownership of the seller (in the instant case, the promoters/builders/developers). It is only after the completion of the construction and full payment of the agreed sum that a sale deed is executed and only then the ownership of the property gets transferred to the ultimate owner. Therefore, any se....