Service tax on land development

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venkatesh vasant joshi (Querist)
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05 July 2012 Mr A has land . He gives his land for the development to builder , Scenario

1- Mr A receives Rs 100 Lakh ....is Mr A is liable to pay service Tax If yes rate ? amount ?

2- Mr A to receive 5 flats worth Rs 100 Lakh is Mr A is liable to pay service Tax If yes rate ?

3-Mr A sold the land to builder for Rs 100 Lakh is Mr A is liable to pay service Tax If yes rate ?

CS SAJU PHILIP MANALEL

CS SAJU PHILIP MANALEL (Expert)
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06 July 2012 The Answer for your query is given in the Circular No. 151 /2 /2012-ST (F.No.332/13 /2011-TRU)dated 10th February, 2012. In nutshell the answers are:
1) No, if A is not providing any service as such. If the amount is received against transfer of development rights it may be termed as a declared service within the meaning of Clause (a)or(e) of section 66E of the finance Act 2004 which read as under "(a)allowing, permitting or granting access, entry, occupation, usageor any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property" "(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
2)Yes, A is receiving construction service in consideration for transfer of development rights. The method of valuation is described in the above notification.
3) No, it is an outright sale.

regards

CS Saju Philip

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