02 July 2013
Yes, service tax is applicable on whole payment made, whether it is after or before completion certificate received.
When party gives advance to the builder then it is deemed as builder becomes contractor and build the building accordingly the requirements of the client.
As per my understanding: If part payment is received before O.C. then the service will become a taxable service. But it doesn't mean that service tax is payable on payment received after completion certificate is received. As payment received after O.C. will be considered as payment received as consideration for sale of immovable property i.e. goods & not for services rendered.
02 July 2013
And please refer the 'c' point below:
B. Construction of Complex [Para(b) of Section 66E]: a. This entry is mentioned as “Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority”. The expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure. b. This service intends to cover whole or part of the construction of a complex, which refers to a group of building, construction of independent building, and construction of civil structure. Such construction whether put to use for commerce or industry, whether the same is used for residential purpose, whether for charitable purpose, whether for the public purpose or by Government would be irrelevant for determining the coverage under this declared service. However, there are few exemptions are there in Negative list and in Mega Exemption Notification No.25/2012-ST.
c. Importance of the 2 nd limb of the entry- This limb plays a vital role in determining the taxability of the activity. The entire activity of the builder/ developer/ promoter would be deemed to be service only if any amount has been received prior toissuance of completion certificate by a Competent Authority. If any amount is received in this behalf after the issuance of completion certificate, then the activity would be a mere transfer of title in immovable property and thereby doesn’t falling under the definition of service. The same was also there in the earlier regime by way of an Explanation to the taxable service definition w.e.f., 01.07.2010.