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Querist : Anonymous

Querist : Anonymous (Querist)

18 March 2016 what is the meaning of "use other than for commerce, industry, or any other business or profession"?(as per 12(a) of not. no. 25/2012

if we get constructed flat by engaging a contractor and sell flat to general public whether this work is for commerce industry or other than commerce industry?

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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18 March 2016 The exemption under entry 12 in Notification No: 25/2012 pertains to civil construction executed for a State / Central Government / Local authority, etc. Therefore this exemption has no link to your query, where the constructed flat is sold to the general public.

The levy of service tax on construction or residential houses is applicable if the project has more than one dwelling unit. Dwelling unit is not defined in the Finance Act 1994 or amendments thereto and so the size of the unit does not matter. If you have constructed just one flat for residential purposes (including use as a guest house) no service tax would be leviable on yur constructiion activities. But if it is a commercial property there will be no exemption.

Nilesh

Nilesh (Expert)
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18 March 2016 That exemption was for services provided to the Govt.. in your case service tax would be applicable

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Querist : Anonymous

Querist : Anonymous (Querist)

19 March 2016 thanks sir
i have one more query
there is a work contractor who construct 820 MIG(g+4) for a govt authority. Govt. authority gets the constructed MIG(HOUSES) and sell to general public for residential public.
whether exemption of entry 12(a) of not. no.25/2012 is applicable in this case?

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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24 March 2016 Clause 12(a) of Notification No: 25 / 2012 - Service Tax provides as under:
"12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;"

A plain reading would mean that the recipient of the service should be the Government, a local authority or a governmental authority - housing boards are covered under the last head, the service should be of a civil structure or any other original works. The civil structure should be meant predominantly for use other than for commerce, industry, or any other business or profession. The civil structure is sold as residential houses to people by the housing board. The civil structure then, it can be claimed is not being used for purposes of commerce, industry, business or profession, because the end user uses it for residential purposes and hence covered by the entry.

However, since it is a matter of interpretation, the department is not likely to accept this interpretation and will claim Service Tax. The matter will have to be settled in appeal at the CESTAT level.