Service tax on ploting with amenities

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 August 2013 Is service tax applicable to the assessee who does the activity of plotting & selling the plot of land with amenities like clubhouse, garden. Assessee is not constructing the house. it just does the activity of plotting for the land owned by the assessee and then sell the plot of land with amenities as mentioned above.

SUBHASH KUMAR JAIN

SUBHASH KUMAR JAIN (Expert)
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22 August 2013 Recently in the case of Narena Construction Vs. UOI it is decided by SC that offer of plot for sale with assurances of development of infrastructure/amenities, lay-out approvals etc is service because it is much more than a mere transfer of plot and is sold with the package of development and not 'as is where is basis'. The above verdict is given for a case under a Consumer Protection Act 1986.

However under the provisions of Finance Act mere sale of Plot does not attract service tax as definition of Service expressly exclude the same, but if the plot is sold with an addition of some development falling with in the meaning of civil structure then it may be taxed deeming it as declared service. The tax will be further be imposable subject to timings of entire payment. If payment is made before development then will be taxable otherwise not.

It is wise to take the entire payment once the development is completed.