Liability of service tax - proportionate basis, Service Tax

[CA. Chalapathy Rao Marthy]

Dear Sir, For example two parties say A and B holding two lands of different proportions say for example A 13% and B 87%. A is experinced in construction activity. B has agreed with A for developemnt of land by constructing a commercial building on the said land. Terms were such that after satisfactory completion of building B will register undivided share of land to A to the extent of 37% such that both will jointly own the building in the ratio of 50 % and 50%. In such case is 1. is A liable for service Tax 2. If answer to 1 is yes how valuation will be done.

Posts / Replies

[YASHAVANTH R.M.]

In my opinion service provider is liable to pay service tax, as per details A will do the construction, it is not clear what will be the % of land construction, after construction it will be shared 50% each,since A doing the construction A raise the bill o B on his portion of construction, Service tax is payable by A and valuation is gross amount charged by A to B for construction of his land portion

[Surender Gupta]

Only a details study of the facts and circumstances would enable to decide the true nature of the transaction, whether it is works contract activity or something else.