Applicability of Service Tax where the entire work of construction is being carried out by the developer and builder themselves and the ready built flats are being sold.

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....pplicability of Service Tax where the entire work of construction is being carried out by the developer and builder themselves and the ready built flats are being sold. <br>News and Press Release<br>Dated:- 14-4-2008<br><BR>There was a wide confusion on applicability of service tax on the construction activity where the developer carry the entire activity of construction of complex themselves with....

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....out engaging the contractor. The confusion widened like anything after a clarification issued by the DGST dated 16.2.2006. However, later on CBEC has clarified the issue by issuing a circular No.96/7/2007-ST dated 23.8.2007 and by withdrawing its earlier circulars. Now the question arises, whether the circular no. 96/7/2007 is prospective in nature or retrospective in nature. Now CESTAT has dec....

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....ided the issue as under: "If no other person is engaged for construction work and the builder/ promoter / developer / any such person undertakes construction work on his own without engaging the services of any other person, then in such cases, (i) service provider and service recipient relationships does not exist, (ii) services provided are in the nature of self-supply of services. Hence,....

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.... in the absence of service provider and service recipient relationship and the services provided are in the nature of self-supply of services, the question of providing taxable service to any person by any other person does not arise. Since the circular is by way of clarification of the law, we hold that it will apply retrospectively" However, the matter is remanded back for denovo consideration....

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.... . (For full text of judgment visit - 2008 -TMI - 3605 - CESTAT, NEW DELHI)<BR> News - Press release - PIB....