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Construction of individual houses is not taxable under 'construction of complex service' or under 'works contract': CESTAT


Statutory definitions need modification

How a residential complex (having more than 12 residential units) is constructed by a person (directly engaging any other person for designing or planning of the layout,) and the construction of such complex is intended for personal use as residence by such person? Is construction by Housing Society for its members can be said as 'constructed for personal as residence use by such person'?

The definition of "personal use" for this purpose is inclusive definition. But, it does not explicitly includes "sale" of residential units.

The role of the 'other person engaged' is limited to for designing and planning of layout. It does not include "construction" by other person.

Statutory definitions need to be modified immediately as per the intention of law makers to effectively impose levy of service tax on residential units virtually constructed by Developers and agreed to sell them during or after completion of construction.

(The views expressed are personal views)

Shvetal Parikh 25/11/2008

 
Re :Statutory definitions need modification

Well this judgment is another aberration. It appears Tribunals are playing to the gallery when it comes to delivering such populist judgments. I am sure my comment will attract some scathing remarks from my friends out there. But I don't care a damn.

When a builder/developer undertakes construction of flats or individual housing units on plots it is liable to service tax if they are engaged in construction of more than twelve flats or twelve individual housing units. I think there is nothing wrong with the statutory definition, the only trouble for the Revenue is the skewed interpretation of these definitions.

Come on! how can a builder/developer claim that he is constructing a mini township with well laid out residential units on individual plots for his personal use (whether he does it himself or sub contracts the job to someone else). Only someone who doesn't have stuff between their ears will buy such a ridiculous argument.

santosh hatwar 25/11/2008

 

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