Department had clarified that agreement with builder/developer for an individual flat will not be subject to service tax. Is that clarification still valid?
As per section 65(91a) of Finance Act, 1994, residential complex does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. As per CBE&C circular No. 108/02/2009-ST dated 29-1-2009, if the ultimate owner enters into a contract for construction of a residential complex with a promoter/builder/developer, who himself provides service of design, planning and construction, and after such construction the ultimate owner receives such property for his personal use, then such activity would not be subjected to service tax, because this case would fall under the exclusion provided in the definition of residential complex. However, if service of contractor, designer or similar services are received, then such person will be liable to service tax. Really, this clarification should be valid even after amendment to definition of
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