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TMI Blog2013 (8) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... ere used in the previous entries - LCS City Makers Pvt. Ltd. Versus Commissioner of Service Tax, Chennai [2012 (6) TMI 363 - CESTAT, CHENNAI] – The previous entries also provided for appropriate abatement for value of goods and material involved in providing such services - The question of valuation of property handed over to the land owner was also dealt with in the said order and it was decided that value of comparable property constructed for independent buyers can be adopted as a basis for service rendered to the land owner. It was very clear that the construction activity was undertaken on the land already registered in the name of the client and therefore service was being provided by the applicant to such clients - the clarificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the demand is based on amounts shown as receipts in their bank accounts which included amounts like those being credited on maturity of fixed deposits and therefore the demand is not worked out correctly. 3. In all these projects the applicant had entered into joint development agreements with the land owners. On construction of the building, agreed area of each of the constructed area of each project was handed over to the owner of the land and the remaining area was placed at the disposal of the applicant for sale to recover the money invested by him and his profits. It is his submission that in such a situation the applicant was doing construction activity for his own benefit and there is no service provider and no service recip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r arriving at the value of construction service rendered to the land owner. He submits that the applicant does not realize such value for the service rendered to the land owner. The only consideration that he receives is undivided share of the land which the applicant can sell to prospective customers. The value at which the applicant sells the constructed area to independent buyers will be higher because he has to fully realize the value of services rendered to the land owner. On such high value, service tax is separately demanded when he sells his share of the constructed area and therefore taxinga notional high value as the value of service rendered to the land owner is logically not sustainable. He points out that this received the atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicant to such clients. He submits that the clarification issued by CBEC was applicable only in cases where the constructed flats or shops were being sold and were registered for sale. 9. He also submits that the example of theatre owner and film distributor is not applicable to the present situation where each person was taking risk for an uncertain profit. In the present case there is service rendered for an agreed consideration and the risk is only to the extent of non-receipt of installments from customers during the course of execution. Such risk is comparable to risk involved in non-payment of consideration by recipient of any service. He further submits that the applicant was well protected against such default because h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Turbotech Precision Engg. (supra) he dispute was about erection and commissioning and that decision has been appealed by the Department. However, it is to be noted that in the case of erection and commission, if it is decided that if the contract cannot be vivisected, it will be perceived as a case of supply of machines but in the case of construction activity if the contract cannot be vivisected the nature of the activity is of providing service rather than sale of goods. For this reason also the decision in the case of Turbotech Precision Engg (Supra) is not applicable to the facts of this case. The decision that a new entry in Finance Act, 1994 would imply that the services covered by the new entry was not covered by the old entry is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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