Confused About Service Tax on Mixed-Use Building Projects? Need Clarity on Tax Assessment!

Hi, I am Suresh Kumar, an Accountant in a Pvt Ltd construction company, and we have been paying service tax since 10.09.2004 for commercial purpose buildings.

Now, I have a doubt in this area. We are constructing a multi-purpose building, which includes commercial purpose buildings, Labour & Staff Quarters (Residential buildings). It is unclear whether we have received approval and assessment from the local tax authority (Local Village Panchayath) for the project.

In this case, should the service tax be paid on the total contract bill value or should it exclude the value of the quarters buildings? Can anybody help me?

Regards,
G. Suresh Kumar
Accountant

Dear Mr. Kumar,

I'm Linnan from Kochi in the construction industry. I had read your query regarding the service tax. Kumar had to read the agreement executing to your clients! That's the main fact. Please read the following:

1. If your company is a contracting company (i.e., building commercial complexes for companies and individuals), and if the agreement states the same, you are taxable.

In case your company is selling the property at the finalized stage, which means an outright sale, you are out of service tax. Here, only VAT is applicable. In this scenario, the property is sold like a product. The risk is high, meaning that you strictly collect the whole amount at the time of registration. If the customer fails to pay, you have no choice other than...

Out of the above conditions, you are liable for service tax.

Linnan