Service Tax on Sale of Flat & Construction Ageement

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  1. Tausif

    Tausif New Member

    We are partnership doing business of Construction.
    In one project we have constructed 2 building containing 32 flats total,
    We have prepared two separate agreement for sale of land i.e.FSI & for construction of flat,
    We have paid service tax under works contract services after taking abatement rate @ 60%, ,

    Now department want to combines the value of land + construction agreement for service tax purpose, SCN received , the detail of the case is given below
    "It clearly appears from the above that , client has created two heads of receipts only to under value their service tax amount. They Have created sale deeds of virtual land for each flat owners and have split the actual sale amount of flats into two, i.e. In the name of construction and in name of land sale, Therefore , virtual splitting of said piece of land seems to be a ploy to lower the service amount, The fact has also been accepted by the partners that they were splitting the payments only to facilitate the buyers, As the owner of the building was the same firm all payment received from the flat owners before the date of completion certificate has to be taken as their gross receipt for the purpose of service tax".

    How give the reply for this querry,

    Please guide me
     
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