Service Tax on construction for subsequent sale
Gauhati High Court has decided in Magus Construction Pvt Ltd and another vs Union of India and others that construction of buildings on own account and subsequent sale thereof to customers does not attract service tax. Service tax on works contract is leviable only where there is a contract between the contractor and the customer and the contractor provides service to the customer.
In this case the contractor entered into an agreement for sale of flats and received the consideration in instalments. The High Court held that the contractor did not provide any service to the buyers and hence service tax was not attracted.