Mr. X is a land owner of 10Acres. X Promoted the project being a laying consiting of 100 Plots and got Layout approval from necessary authorities.
M/s. ABC Pvt. Ltd. entered into an agreement with Mr. X for Developing, Marketing & Selling of above Layout [Plots].
The agreement says that M/s. ABC Pvt. Ltd. is authorized to deal the customer on end-to-end basis and can collect full consideration from Plot Buyer. All Marketing, Advt., etc., should be born by M/s. ABC Pvt. Ltd. It is the responsibility of M/s.ABC Pvt. Ltd. to complete the development of layout such as Laying Blacktop Roads, Sewage, Drainage, Electricity, Compound wall, Water Tank etc. to ensure the timely completion of plot [piece of land] development for customer.
On registration, the sale deed says that Land belongs to Mr.X, Developing by M/s.ABC Pvt. Ltd., and will register the document in favour of Customer / Plot Buyer. X have no responsibility of development activities proposed in Sale deed. On registration of Plot, Mr.X will get his part of sale consideration for land from M/s. ABC Pvt. Ltd.
From the above, It is clear that, the land development agreement is between ABC Pvt. Ltd. and the Plot Buyer. Mr.X doesn't accept to be a part of development activity. He is getting only consideration for Land as per the agreement entered with M/s. ABC Pvt. Ltd.
It is M/s. ABC Pvt. Ltd. which collects full sale consideration [for both Land Cost & Development Cost] from the Plot Buyer and pay Mr.X only Land Cost as agreed before. So, Mr.X is in development agreement neither with M/s. ABC Pvt. Ltd. nor with the Plot Buyer.
The sale deed is also saying that Land owner [Mr.X] is getting consideration for Land amount only. It further says that, M/s. ABC Pvt. Ltd. is getting consideration only for development activities.
In case of Above, Please guide me by answering the following:
1. Whether M/s. ABC Pvt. Ltd. liabile to Pay Service Tax?
2. If, answer to Question No. 1 is Yes, under which section he is liabile to pay service tax and on What is the Rate of Tax?
3. As M/s. ABC Pvt. Ltd. is entering Development agreement with individual plot buyers through Sale Deed, is Service Tax Exempted?
Please mention case laws / notifications / circulars (available if any) with your answer.
Thanks in Advance!!