No Service Tax
The Service Tax Commissioner has clarified that when an apartment is sold by a builder under a sale agreement it does not attract payment of service tax.
Further even if the purchaser of the apartment enters into a construction contract with a builder, it does not attract payment of service tax.
But the clarification by the Service Tax Authority has also an exception to the above. It has a rider stating that “in both these situations, if services of any person like contractor, designer or a similar service provider are received, then such a person would be liable to pay service tax”.
SERVICE TAX (APARTMENT)
|Whether service tax is leviable under construction of complex service [section 65(105)(zzzh)] on builder, promoter, developer or any such person,-(a) who gets the complex built by engaging the services of a separate contractor, and(b) who builds the residential complex on his own by employing direct labour?||(a) In a case where the builder, promoter, developer or any such person builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of the said residential complex, the contractor in his capacity as a taxable service provider (to the builder / promoter / developer / any such person) shall be liable to pay service tax on the gross amount charged for the construction services under ‘construction of complex’ service [section 65(105)(zzzh)].(b) If no other person is engaged for construction work and the builder / promoter / developer / any such person undertakes construction work on his own without engaging the services of any other person, then in such cases,-(i) service provider and service recipient relationship does not exist,(ii) services provided are in the nature of self-supply of services.Hence, in the absence of service provider and service recipient relationship and the services provided are in the nature of self-supply of services, the question of providing taxable service to any person by any other person does not arise.|