A complex constructed for personal use is excluded from the definition of ‘residential complex’. Thus, there is no levy of service tax on such construction. In other words, if (even) in a large complex, a person gets a flat constructed for his personal use, there would be no service tax liability.
The explanation to clause (zzzh) inserted in the current budget says that construction of complex would be deemed to be a service provided by the builder to the buyer (except where entire payment is made after grant of CC). Now in majority cases
a. payments are made prior to grant of CC; and
b. the buyers buy the flat for personal use.
Thus, in majority cases, it would be deemed that the buyer is engaging the builder for construction of the flat – which is for personal use of the buyer. Therefore, the flat gets excluded from the definition of ‘residential complex’. It means there is no levy of service tax on majority of housing complexes being constructed in the country.
Is this view correct?
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