No ST on sale of flat even if advance was received by builder prior to completion of construction

Section 65(30a) of the Finance Act, 1994 - Taxable services - Construction of Complex Services - Stay Order - Period from 1-4-2006 to 30-9-2007 - Assessee was engaged in developing and constructing residential complex having more than twelve residential units on its own land with own resources for selling same to prospective buyers - Department argued that since advances were being received from buyers and construction progressed with receipt of payments from prospective clients, it could not be said that assessee used its own resources for construction and hence, amounted to construction services to prospective buyers - HELD : When construction of residential complex is for sale of flats and same are ultimately sold to customer under agreement, it cannot be held that there was any service being provided by builders to their customer even if a part amount of cost of flats is being received in advance - Such advance amount is against sale consideration of flat and building and not for obtaining any service, so as to make it leviable to Service-tax - Further, as per Circular dated 29-1-2009, service tax does not arise on builders selling flats - Hence, pre-deposit was waived [Paras 3 & 4] [In favour of assessee]

Circulars and Notifications : Circular No. 108/2/2009-S.T., dated 29-1-2009

Refer:[2014] 46 taxmann.com 254 (New Delhi - CESTAT)

CESTAT, NEW DELHI BENCH

Indo Global Estates

v.

Commissioner of Central Excise, Chandigarh