ServiceTax – Construction of complex service –The Appellants argue that there is no
relationship of service provider and service recipient between the developer
and the Land Owner. According to them it
is a relationship in a joint venture for profit. Both the parties have joined together in the
business of construction of complex and the land owner brings in the capital by
way of his land. The Developer by way of
his capital and services and they jointly construct the complex and use or sell
the flats for profit. He argues that
CBEC had clarified the position that no service arises in such context. This clarification dated 29/01/2009 is
examined later in this order.
On the contrary we find that the
Joint Development agreement does not indicate any terms on the above lines. The
parties were neither taking risks jointly or doing any common activity. There was no participation by the Land Owners
in organizing or carrying out the activity.
The Joint Development agreement as one in which the land owner transfers
part of his right in the land and gets the value of such rights transferred, in
the form of constructed flats which consists of value of material used and
services rendered by the developer.
After the Land Owner transfers a part of his rights through the
agreement, his share of U.D.S. is registered in his name and he is like any
other prospective buyer for whom construction of complex is carried out under
an agreement for construction of flats except that he has a guaranteed right to
get his share of the number of flats constructed. We further examine the various issues raised
in the light of this finding.
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