TMI BlogConstruction of Complex, Building, Civil Structure or Part thereofX X X X Extracts X X X X X X X X Extracts X X X X ..... lopment or planning authority. construction includes additions, alterations, replacements or remodelling of any existing civil structure. Analysis: This service covers all types of construction activities. Construction activity may be in form of a construction of residential complex or construction of a commercial complex. Also it covers construction of any other civil structure. In case, if entire consideration for the construction activity received after the issuance of completion certificate by the competent authority, it will not be covered in this service. The object of this clause is simple and very clear that in that case it will be a sale of immovable property and therefore such sale could not be treated as a service. But in case some payment or payments received in instalments on or before the completion of structure i.e. before issuance of completion certificate, the builder will be liable to service tax. The above definition of construction includes addition, alternations, replacements or remodelling of any existing civil structure. It means addition of floors in a building , alternations of the building such as extra balcony , replacement of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs even for the flats given to the land owner. It may be pointed out that in a recent judgement passed by the Mumbai High Court in the case of Maharashtra Chamber of Housing Industry and Others vs. Union of India [2012 (1) TMI 98 - BOMBAY HIGH COURT] has upheld the Constitutional validity of levy of service tax, under clauses (zzzh) and (zzzzu) of section 65 , on similar construction services provided by a builder. A relevant portion of the judgement is reproduced below- 29. The charge of tax under Section 66 of the Finance Act is on the taxable services defined in clause (105) of Section 65. The charge of tax is on the rendering of a taxable service. The taxable event is the rendering of a service which falls within the description set out in sub-clauses (zzq), (zzzh) and (zzzzu). The object of the tax is a levy on services which are made taxable. The fact that a taxable service is rendered in relation to an activity which occurs on land does not render the charging provision as imposing a tax on land and buildings. The charge continues to be a charge on taxable services. The charge is not a charge on land or buildings as a unit. The tax is not on the general owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 6.2.2 What would be the service tax liability in the following model - land is owned by a society, comprising members of the society with each member entitled to his share by way of an apartment. Society /individual flat owners give No Objection Certificate (NOC) or permission to the builder/developer, for re-construction. The builder/ developer makes new flats with same or different carpet area for original owners of flats and additionally may also be involved in one or more of the following: (i) construct some additional flats for sale to others; (ii) arrange for rental accommodation or rent payments for society members/original owners for stay during the period of reconstruction; (iii) pay an additional amount to the original owners of flats in the society? Under this model, the builder/developer receives consideration for the construction service provided by him, from two categories of service receivers. First category is the society/ members of the society, who transfer development rights over the land (including the permission for additional number of flats), to the builder/developer. The second category of service receivers consist of buyers of flats other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taxable service may be in the nature of upfront lease amount or annual charges paid by the concessionaire to the Government. Such services provided by the Government would be in the negative list entry contained in clause (a) of section 66D unless these services qualify as support services provided to business entities under exception sub-clause (iv) to clause (a) of section 66D. Support services have been defined in clause (49) of section 65B as infrastructural, operational, administrative, logistic marketing or any other support of any kind comprising functions that entities carry out in the ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of movable or immovable property, security, testing and analysis . If the nature of concession is such that it amounts to renting of immovable property service then the same would be taxable. The tax is required to be paid by the government as there is no reverse charge for services relating to renting of immovable property. In this model, though the concessionaire is under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for certain specified types of buildings. How would leviability of service tax be determined in such cases? In terms of Explanation to clause (b) of section 66E in such cases the completion certificate issued by an architect or a chartered engineer or a licensed surveyor of the respective local body or development or planning authority would be treated as completion certificate for the purposes of determining chargeability of service tax. 6.2.8 If the person who has entered into a contract with the builder for a flat for which payments are to be made in 12 instalments depending on the stage of construction and the person transfers his interest in the flat to a buyer after paying 7 instalments, would such transfer be an activity chargeable to service tax? Such transfer does not fall in this declared service entry as the said person is not providing any construction service. In any case transfer of such an interest would be transfer of a benefit to arise out of land which as per the definition of immoveable property given in the General Clauses Act, 1897 is part of immoveable property. Such transfer would therefore be outside the ambit of service being a transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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