Construction service

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CA Sudha S Keswani

CA Sudha S Keswani (Querist)
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23 April 2013 Dear expert,
whether charges collected for transfer of flat under construction is liable to service tax?

CA Vikas Acharya

CA Vikas Acharya (Expert)
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24 April 2013 if you purchased a under construction flat and then sold it on higher prices no service. but income tax will be charged.
if you are the developer of that house, then situation has to be check whether you asking from point of view of a whole complex developer or an individual etc.

CA Sudha S Keswani

CA Sudha S Keswani (Querist)
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25 April 2013 hi vikas,
in case of builder who provide service of construction of residential complex. builder starts collecting demand for each slab and in that case if a person needs to cancel the flat and other person is ready to buy flat under construction then builder charges transfer charges to first person. i am asking in that case whether transfer charges are applicable to service tax to builder?

CA Vikas Acharya

CA Vikas Acharya (Expert)
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26 April 2013 whether Service Tax is leviable on such transfer charges under head Real Estate Agent Service or not?

This issue has been resolved by Honorable CESTAT New Delhi in case of M/s Ansal Housing & Construction Versus Commissioner of Service Tax; New Delhi-2011-TMI-213038 wherein it was held that the contention of the revenue to treat the administrative charges/transfer charges as a consideration received towards the service rendered in capacity of Real Estate Agent is not sustainable.

Apart from this, the same view was taken in case of Puravankara Projects Ltd. vs. CST, Banglore-2010(18) STR 7 (Tri.- Bangalore) wherein it was held that Real Estate Agent is a person who is engaged in rendering any service in relation to, among other, sale of real estate. However, in the given case, the person who has entered in to the agreement with appellants for purchasing flats under construction and paying periodical consideration is actually selling ownership rights in flats to other buyer. Developer of flats in between this has no role to play. Though, the developer of flats collects a charge in such transfer of owner ship of flats as per the agreements with the prospective buyer which cannot be considered as a consideration received towards any service rendered by the developer of flats as real estate agent. Hence the same is not taxable.

Hope the information will assist you.

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