We are a real estate/construction company dealing in developement of group housing societies. When customer cancel their booking then we charges a damange compensation against their booking cancellation. My query is that, are we liable to pay service tax on such amount forfeited on cancellation. We are not collecting S. TAX from customers on the view that it is not any kind of service provided.
15 December 2013
As per my view,you are correct in not collecting service tax from customers. Firstly,you are not providing any services against these charges. Secondly,service tax is levied on consideration not on compensation charges.
CAclubindia
