Vasantha Green Projects v. CCT

FINANCE ACT, 1994

--Value of taxable services--Inclusion in gross valueCost of land already included in sale value of villas----As consideration received from land owners, in the form of land, was invested in construction of villas to other buyers on which service tax was paid, demand of service tax again on sale value of Villas was not sustainable.--Assessee entered into joint development agreement to construct villas on land owned by landowners and sale the same to the prospective customers. Revenue contended that to arrive at gross value for discharge of service tax, the value of construction of villas, which were provided free of cost to the landlords also needs to be considered. Assessee contended that at the time of sale of Villas to prospective customers, cost of land in price of Villas was already included and service tax was discharged accordingly. Therefore, bifurcation of agreement into two separate transactions, i.e. between builder and land owner and builder and buyer was incorrect. Held: Service tax was liable to be paid on gross amount charged i.e. consideration received from landowners in kind and consideration received from prospective customers. Since amount attributable to the consideration received by assessee in the form of land rights from the land owner was included in the value of villas sold to prospective customer, consideration in form of developmental right was considered in assessable value. Thus, once the service tax liability was discharged on the gross amount, demand of service tax on the same amount again would amount to double taxation.