By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Pre-deposit – Prima Facie, the value of flats allotted to the land owner by the assesseebuilder to be determined based on the gross amount charged by the service provider to provide similar service to any other person – Rule 3 of Valuation Rules is applicable.
Facts:
The applicant provided taxable service under the category of “Construction of Residential Complex Service”. It entered into joint venture with land owner for construction of 72 flats out of which 48 flats belonged to assessee and service tax was paid on consideration received thereon and 24 flats belonged to land owner and no service tax was paid thereon. A show cause notice was issued proposing service tax on the 24 flats of the land owner’s share on the ground that they failed to pay service tax for the taxable service provided by them to the land owners for construction of 24 flats in consideration of land value. The applicant submitted that the consideration is the value of the land and hence it is liable to pay tax only on the land value and not on the value determined as per Rule 3(A) of (Determination of Value) Rules, 2006.
Held:
Tribunal held that it is undisputed that the consideration received for the service rendered to land owner in respect of 24 Flats is not wholly or partly consisting of money and therefore, Rule 3 of (Determination of Value) Rules, 2006, would be invoked. As per Rule 3(a), where consideration received is not wholly or partly consisting of money then the value of such taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to any other person. Since the tax is assessed on the basis of the value of similar flats and therefore, prima facie, the tax was determined properly. Pre-deposit was ordered
