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Value for service tax

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Querist : Anonymous

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Querist : Anonymous (Querist)
28 May 2013 DEAR EXPERTS

IF THE LAND OWNERS OF THE PROPERTY COME TOGETHER AND FORM A PARTNERSHIP FIRM TO CONSTRUCT A RESIDENTIAL COMPLEX ON THEIR UNDIVIDED SHARE OF LAND AND CONTRIBUTES THEIR OWN CAPITAL FOR CONSTRUCTION PURPOSE AS WELL AS RECEIVES THE ADVANCES IN THE NAME OF THE FIRM FROM THE PROSPECTIVE BUYERS, ON WHAT VALUE THEY HAVE TO PAY SERVICE TAX ?

ARE THEY LIABLE TO PAY SERVICE TAX ON EVEN CAPITAL CONTRIBUTED BY THEM FOR CONSTRUCTION OR ONLY ON ADVANCES RECEIVED
FROM PROSPECTIVE BUYERS OF THE RESIDENTIAL HOUSES / MULGIES.

MY CONTENTION THAT THE OWNERS AND BUILDERS ARE SAME HOLDS GOOD. PLEASE CLARIFY THANKS IN ANTICIPATION
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Ashish Vaish

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Ashish Vaish (Expert)
28 May 2013 Yes, your contention is right. The partnership firm would be liable to pay Service Tax only on the advances received from buyers of residential units. The money brought in by the partners would be their capital and not receipts towards services.
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