Unauthorised Buildings - - No Service Tax?
As per the Service Tax law,
91a) “"residential complex” means any complex comprising of"
(i) a building or buildings, having more than twelve residential units;
(ii) a common area; and
(iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system,
located within a premises and the layout of such premises is approved by an authority under any law for the time being in force
So if the layout is not approved, you don't need to pay Service Tax?
In Friday's DDT we asked you this question
We have a letter with us written by the Joint Commissioner (Tech) of the New Delhi, Service Tax Commissionerate to the Army Headquarters which reads
In view of the Board's clarification received by this office, it is clarified that service tax would not be leviable on construction of complexes under question if their layout does not require approval by an authority under any law for the time being in force.
Based on this letter, many of the contractors building flats for the Defence Ministry are not paying service tax. Whether the Defence Ministry does not require any permission to construct buildings is a different matter but what is this law that exempts unauthorized builders from service tax?. And what is the logic in this law of taxing only buildings with more than 12 residential units? Say if an apartment complex has only 12 units each with an area of 3000 Sq. ft. and costing Rs. 3 Crores, they need not pay any service tax. But if an apartment of poor people having 14 residential units each costing Rs. 5 Lakhs, there is a service tax. Is it a system where the poor or taxed and the rich are exempted?