whether service receiver liable to pay service tax if service provider does not deposit service tax in normal condition ( NOT RCM)
i would like to know about whether service provided by hospital is cover under service tax or not . and specially entity is LLP. and multi specialist hospital. i hope i will received prompt and response from my senior.
thank and regard
if input service is always excess than output service , in this case i have wrongly availed cenvat credit and utilised cenvat credit then whether it can be assumed that cenvat credit wrongly availed and utilised and now i havt to pay interest and reverse wrongly availed of cenvat credit..
No Service Tax on Under Construction Property: Decoding Delhi HC Judgement
June 22, 2016
Under construction jpeg- Neetika New
Delhi High Court has recently passed a contentious ruling on levying of Service Tax on under-construction properties. The judgement has left buyers across the country gasping for clarity. We spoke to experts to break down the complicated nuances of this verdict in order to understand its impact and consequences. Below is everything a home buyer needs to know.
Brief background of Service Tax
· This tax came into effect in 1994 and was introduced by the then Finance Minister Dr Manmohan Singh.
· It is payable on services provided by the service provider who then submits it to the Government of India.
· The applicable rate from June, 2016 is 15%.
Service Tax on sale of apartments
· Service tax is applicable on almost all services that a consumer avails, including buying an under-construction property.
· It is levied by the Central Government on the construction services offered by the developers to buyers.
· In the case of an under construction property, the developer is deemed to be the provider of construction services to the home buyer, and hence service tax is charged on the service portion included in the cost of construction.
· It is not charged on the entire value of the property but only to the extent of the service element involved in the cost of construction.
· For the purpose of calculation, 30% of the gross value of an under construction unit is taken.
· It is applicable on both commercial and residential properties.
What does the judgement say?
The Delhi High Court has held that service tax cannot be charged on under construction property in a complex, which includes builder flats, group housing flats and builder floors. The primary reason for this is that there is no clear cut mechanism for arriving at a value of service element involved in such transaction.
What was challenged and why?
The petitioners had challenged the demand of service tax on under construction property as well as service tax on ‘Preferential Location Charges’ or PLC.
Buyers stated that their agreement with the builder is a composite contract for the purchase of immovable property and that in the absence of specific provisions to ascertain what exactly constitutes service, the levy of service tax is unjustifiable.
What was upheld and what was struck down?
The provision regarding levying service tax on the Preferential Location Charges was held valid as it was a ‘service’ as per the court- Sec 65(105)(zzzzu) of Finance Act, 1994
But the court struck down the provision which provides for levying of service tax on buying of an under-construction immovable property- Explanation to Sec 65(105) (zzzh) for the reason that there was no valuation mechanism available in the legal provision for arriving at the value of service for payment of service tax.
Is there a cut-off date for the applicability of this order?
Though the judgement was given on purchases made before July, 2012, but in practice will apply to all transactions made after this verdict.
Does this judgement apply on other states also?
The position on this still demands clarity as the earlier judgements from Punjab & Haryana, Mumbai and Karnataka High Courts have upheld the levy of service tax on under-construction properties. Therefore, in the present scenario, the decision of Delhi High Court will not be applicable to other states.
What can follow?
The central government can challenge the judgement in Supreme Court or bring any amendment in the existing law to overrule the judgement and settle the ambiguities once and for all.
In case the Supreme Court decides in favour of the Delhi High Court judgement, the rule will become applicable on all states.
So, it entirely depends on what stance the Union Government decides to take.
What should home buyers do?
Since the judgement currently applies only to purchases made in the jurisdiction of Delhi High Court, the buyers who have bought homes in Delhi and paid Service Tax on it should immediately lodge a claim with the government for refund along with the interest.
PS. The Central Service Tax Department has already made up its mind to move to the Supreme Court. However, there is no official confirmation on this.
What about after O.C. Certificate?????
Request all the experts to help me in solving an issue regarding implication of service tax on Privilege Cards. The case is as below:
A company XYZ Pvt. Ltd. is dealing in the business of privilege cards i.e. the company tie up with other companies (like Hotel, Restaurants, Spa, Gym, etc.) for a promotional campaign on behalf of the later companies. It prints the cards with various offers, sell them in market on their own and the later companies honor the offers claimed by customers (privilege card holders) when they visit there. And at last the former company pays an agreed amount to the later companies.
In this whole scenario, is there any implication of service tax? Shall the company XYZ Pvt. Ltd.charge service tax from customers?
Thanks in advance.
I have booked office for my profession of Mutual Fund distribution.I am paying service tax on mutual fund commission income.
Can i take set off against the part payments given to builder for my office?
The builder told that on office payment of 20 lakhs you need to pay service tax on 30% of 20 lakhs as 70% is exempt.So my effective service tax is
600000*15%= 90000. So can I claim that 90000 against my payment of service tax on my mutual fund commission?
One of client hiring motor car and given vehicle renting services to others with his own vehicle.He crossed the basic limit of service tax. What is the service tax applicable to him? he has to pay 40% of the bill value or what please let me know.
We are in business of Works Contract, we issued the bill with Service tax to our vendor for labour work. We have the Service tax Reg. no. under Works Contract Service.
Now we are using our equipment in execution of of labour work and will raise the Bill for Rent on monthly basis for that equipment.
Please tell us whether we have to obtain additional category of service for renting the equipment and labour supply other than Works Contract.
Thanks in Advance
Kindly suggest some good books on service tax for practice purpose
Sir i am a MES contractor i have been doing the repair and maintenance of Billets at air force station whether i am liable for service tax or not ? . Please tell about applicability before 01.04.2015