Service tax on joint development agreement

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aaditya

student

22 Points Posted on 30 January 2013

Hello Everyone ! As we all know Joint Development Agreement (JDA) is a complex issue. For the known fact that in a JDA landowner and builder enter into a joint venture and share the constructed area in agreed proportion. I would like to know under such circumstances who would be liable to pay the service tax ? In a recent judgement it was held that service tax would be applicable on the JDA and builder would be liable to pay service tax (LCS City Makers (P.) Ltd. v. Commissioner of Service Tax, Chennai). But my questions are :

1. Can the builder recover the service tax from the owner ?

2. If yes, then in what manner ?

3. In case where a builder has hired a contractor, who would be liable to pay the service tax - Builder or Contractor ?

4. Where there is no explicit amount for the project construction in the JDA, how would the service tax be calculated ?

Answers would be much appreciated. Thanks in anticipation.

Replies (3)

NITIN

Student

62 Points Posted on 27 November 2014

Hello,

Kindly require your sugesstion on Service Tax and Vat applicability on Develoment Agreement.

Gagan Deep Singh

CHARTERED ACCOUNTANT

1039 Points Posted on 29 November 2014

The answer to your queries are as follows:

1. Generally for builder consideration is in the form of land. Therefore, builder can recover the ST amount only if builder & owner mutually agree that owner will reimburse the service tax amount.

2. Contractor will be liable for his own services. For e.g. Contractor charges ST under works contract for construction of building. Then in that case builder can take credit of ST charged by the contractor while discharging his liability under construction services of building .

3. Even when no explicit amount mentioned builder will be liable because consideration for builder is land on which he has to discharge service tax. Now a days to assess the value of land is not difficult.