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Levy of Service tax

CA Sanjay Baheti (PROPRIETOR) (1155 Points)

26 January 2010

My client being a Partnership Firm engaged in construction of residential independent tenaments & Row Houses.Total Number of such houses are 28.

Further he is Main Developer & also involved 3 sub developers for construction of such houses so that each developer/sub-developer will look after less than 12 Houses towards completion of such activities.

Now my query is whether such services are covered under construction of Residential Houses exceedind 12 Houses & subject to levy of Service tax to each Main developer/sub-developer.

Please treat it as urgent & reply accordingly.

If any clarification is needed in this matter please ask.

Regards.

Ca Sanjay Baheti,Ahmedabad

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1 Replies

Venkat M (FCA) (133 Points)
Replied 08 February 2010

Even though the main developer has sub-contracted construction work to other developers, fact is the main contract is for more than 12 residential units. In the present case, service tax would be payable by the main developer.

In my opinion , Service tax would also get attracted for sub-developers. Refer Harekrishna Developers(2008) (AAR):- Here, the applicant was constructing sub-plots within a bigger plot having common facilities with separate contracts for each construction. The authorities ruled that this would be taxable since the definition of 'residential complex' includes the word PART THEREOF.

Courtesy: VS Datey's Ready Reckoner