My main point is that in view of the definition of RESIDENTIAL COMPLEX in the charging section 65(91a) read with the definition of CONSTRUCTION OF COMPLEX in section 65(30a) which specifically excludes from tax A COMPLEX WHICH IS CONSTRUCTED BY A PERSON DIRECTLY ENGAGING ANY OTHER PERSON FOR DESIGNING OR PLANNINGOF THE LAYOUT,AND THE CONSTRUCTION OF THE COMPLEX IS INTENDED FOR PERSONAL USE OF SUCH PERSON, irrespective of the liability of the Builder or his sub contractor,the flat owner is totally insulated from the liability to service tax.

This is only confirmed by the circulars and notification which are not contrary to the provisions of the Act or law but only sets at rest any doubt or ambuguity in the minds of the Department and the public at large.As the circular says such transactions are outside the perview and ambit of service tax under the Construction of Complex service. If it is assessed under Works Contract Service which came into the tax net w e f 1/6/2007 the provisions may be different.

I am talking only of agreements prior to 1/6/2007 and in respect of which there was only one head under which it could be taxed ie. Construction of Complex service.

The question of evasion or non evasion of stamp duty nor tax planning is the subje ct matter of the reference….but simply whether the flat owner is liable to pay service tax.

I would appreciate your views on this.

Regards.

Jose.

A Member:
5.1) Shall form the Association of Owners and get the Deed of declaration registered within a reasonable period from the date of completion of construction or from the date of last registration of UDI/Unit and …. ”
The above mandatory rule as framed by CREDAI is not reconcilable at all with what the law clearly provides with regard to the timing / time limit for the Builder to have the Declaration (Form ‘A’) registered.
4. As may be readily seen, even on a plain but straightforward reading and understanding of the relevant sections of the Apartment Act and the Rules there under, as also the contents of the prescribed Form ‘A’, the correct legal position is more than abundantly clear, which is as under:
A) Execution and Registration of the Deed of Declaration in Form ‘A’ under the Indian Registration Act is the first stage for compliance.
Importantly, that has to necessarily precede the second crucial stage namely, – the Execution and Registration of the Deed of Conveyance by the Builder, of any one or more of the Units (Apartments) in a building; that necessarily could be only after the ‘construction’ has been completed in every sense.
B) The Formation and Registration of the ‘Owners’ Association’ under the Act (read with /under the Co-operative Societies Act) is the third / last stage.
The mandate of CREDAI referred above is, to put it rather mildly, and in an inoffensive manner of speaking, tantamount to a reversal of the normal logical order i.e.- PUT THE HORSE BEFORE THE CART.
5. According to my information, however, the procedure followed as a matter of practice, besides by other builders, by the member builders of CREDAI is not uniform but is varied. So much so, there is an unadulterated chaos and confusion in the matter of compliance with the law, thereby impairing / adversely impacting the valuable rights and interests of the purchasers’ community as conferred by the law.
6. I have on a feedback Note sent through its website stressed that with a view to doing full justice to its own laudable objectives, more so for saving the purchasers from the currently obtaining disastrous consequences recklessly meted out to them, it is imperative that CREDAI should come out with a suitable modification and clarification of the Code, for the Builders to follow at least from now on. Also that, the matter is of such a serious nature that it, in all fairness, deserves top priority for effective steps being taken on a war footing by CREDAI. So far as I know, CREDAI seems to have taken no action in the matter thus far.
7. No doubt, the above is one of the several aspects, which hopefully would require to be duly taken care of in the new regulatory central law in the offing. Nonetheless, even under the existing law the correct position is, in my perception, more than clear. It is, therefore, obligatory on the part of CREDAI to volunteer and come forward with the necessary modification and / or clarification of the existing mandate in its Code; may be, if it considers necessary, after taking legal opinion from its own Advisers.

V.Swaminathan

How is the capital expenditure to be incurred by the apartment association is to be shared by the residents? Is it equally or proportion to the UDS they possess?

Kindly clarify. Thanks.

Thanks,
narayan

Please comment on the Advance Authority decision on Hare Krishna Developers case(where in it was held that construction of residential complex amount to service), Supreme Court decision on K Raheja’s case(where it washeld that construction of residential complex is a works contract), Supreme Court decision in Faquir Chand Gulathi’s case where it held that it is a service. Also your views on the Ratan Melting case decided by Supreme Court, where it is held that any circular which is agaisnt the law is not valid.

Please comment
1) what will happen if there are two agreements and buyers have been deliberately saving stamp duty on UDS Cost due to this arrangement and if registration authorities use their powers to demand more stampn duty due to the noise created by cuistomers that service tax is bot payable
2)If it is a works contract can we say that there is a self supply service since works contract will obviously have material and labout component and also two parties.