Ser tax: joint development agreement

Dear All,

Good Day!!

Kindly if any of you can throw show some light on the following query w.r.t Laws prevailing in Chennai, Tamilnadu?

Landlord "Mr. A" enters a Joint Development agreement with his own company "M/s. ABC P Ltd." for developing land and constructing residential complexes with following conditions:

1) M/s. ABC P Ltd to develop, construct and market the "Villas"

2) Mr. A to get 30% of the Total Sale value for the Land provided.

3) Land is apportioned into various plots for construction and sales.

4) M/s. ABC starts developing Land, and in the course of construction books One flat for a customer "Mr. C" and received advance payments on various dates (say), viz.:

(a) On 20-Apr-13: Rs. 2,00,000/-

(b) On 20-May-13: Rs. 2,00,000/-

(d) On 20-Jul-13: Rs. 2,00,000/-

(e) On 20-Aug-13: Rs. 2,00,000/-

4) Also, note the Plot has been registered in the name of Mr. C on 30-Apr-13 for a Registered Valuation of Rs. 2,00,000/-

5) Question: What will be the service tax liability for various instalments received,

a) If the Plots are inside a gated community ?

b) If the various Plots under construction are adjacent plots but not inside a gated community, and will not have any common area to be shared by the Plot owners ?

c) If the Vilas are sold after obtaining completion certificate, with no advance received earlier?

d) If the vilas are handed over to Landlord as consideration instead of 30% share?

Thanks in advance for your replies and answers...

My views:

As per Clause 14 of the Meganotification no. 25/2012-Service Tax:

""" Services by way of construction, erection, commissioning, or installation of original works pertaining to,-

(a) an airport, port or railways, including monorail or metro;

(b) a single residential unit otherwise than as a part of a residential complex;

(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d) post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or

(e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;""""

From the reading of above clause, i understand that exemption is available only if

1) It is a Original Works contract

2) Related to A SINGLE RESIDENTIAL UNIT and

3) Not part of a residential Complex.

That is, if all the 3 conditions are simultaneously satisfied, only then Exemption can be availed. Since the construction is of various residential units, may not be part of Residential Complex, but still since it is more than SINGLE RESIDENTIAL UNIT, it is service taxable. (for Query a, b, and d)

Ser. Tax is to be calculated considering 4 options

viz.:

a) Availing abatement of 70% or 75%

b) On Service Value @ 12.36%

c) On Gross Amoutn Charged i.e. excluding Land Value @ 4.944% With no CENVAT on Inputs

d) On Gross Amoutn Charged i.e. excluding Land Value @ 12.36% With CENVAT on Inputs

YOUR VIEW PLEASE.....