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HC : Flats constructed, alloted to landowner against land transfer, prima facie taxable; Upholds pre-deposit

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  • HC upholds CESTAT order directing pre-deposit in respect of construction of flats for landowner, taxable as 'construction of residential complex service' u/s 65(105)(zzzh) of Finance Act;
  • Assessee entered into joint venture agreement with land owner for construction of 72 flats, where assessee owned 48 flats and discharged service tax thereon, while remaining 24 flats assigned to landowner as his share equivalent to land, on which no service tax was discharged;
  • Rejecting assessee's contention that no service tax would be payable as no amount received from landowner towards construction of flats allotted to him, HC states, "If there is no monetary consideration in the transaction, then Section 65 of Finance Act, 1994 provides for various methods for valuation";
  • States that language of Section 65(105)(zzzh) and nature of services provided by assessee is construction of flat to land owner and transfer of land is only for purpose of providing such taxable service, it is for assessee to establish fact that value of land should be taken which CESTAT ought to consider while deciding case on merits;
  • Further notes that assessee engaged in promotion and construction of residential complexes, not works contract and that plea of entitlement to Notification No. 29/2007-ST benefit not taken either before Adjudicating Authority or Commissioner (Appeals)  : Madras HC
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Guest Sunday, 19 November 2017

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