Construction Services - Flats allotted to landowner are to be valued based on value of similar flats allotted to outsiders

Southern Properties & Promoters v. Commissioner of Central Excise,(Service Tax), Coimbatore*([2015] 49 GST 695 (Chennai – CESTAT)

 

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FACT:

 Assessee entered into a joint venture agreement with a land owner for construction of 72 flats, out of which : (a) 48 flats belonged to assessee and  service tax was paid thereon; (b) 24 flats belonged to landowner but no service tax was paid thereon- Department demanded service tax on 24 flats based on normal price charged for similar 48 flats, applying rule 3(a) – Assessee argued that  value of flat was equal to consideration by way of land received from landowner under section 67(1)(ii).

HELD:

Prima facie, assessee’s contention was not tenable – since consideration received for service is not wholly or partly consisting of money ; therefore, rule 3 would be invoked – As per rule 3(a), value would be equal to consideration charged by service provider to provide similar service to any other person – Since, in this case, tax was assessed on basis of value  of the similar flats; therefore, tax was determined properly after allowing applicable abatement s – Hence, pre- deposit was ordered.