TMI BlogImposition of service tax on Builders - regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... Construction of residential complex was brought under service tax w.e.f. 01.06.2005. 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 'Constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l complex, he becomes the owner of the residential unit and subsequent activity of a builder for construction of residential unit is a service of 'construction of residential complex' to the customer and hence service tax would be applicable to it. A contrary view has been expressed arguing that where a buyer makes construction linked payment after entering into agreement to sell, the nature of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided in the definition of 'residential complex'. However, in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person would be liable to pay service tax. 4. All pending cases may be disposed of accordingly. Any decision by the Advance Ruling Authority in a specific case, which is contrary to the foregoing view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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