de99180d_fications__Circulars__Analysis__Analysis
[Para.No.] 2.1 (B) [Clarification] (B) Valuation : (i )Value, in the case of flats given to first category of service receiver, is determinable in terms of section 67(1)(iii) read with rule 3(a) of Service Tax (Determination of Value) Rules, 2006, as the consideration for these flats i.e., value of land / development rights in the land may not be ascertainable ordinarily. Accordingly, the value of these flats would be equal to the value of similar flats charged by the builder/developer from the second category of service receivers. In case the prices of flats/houses undergo a change over the period of sale (from the first sale of flat/house in the residential complex to the last sale of the flat/house), the value of similar flats as are sold nearer to the date on which land is being made available for construction should be used for arriving at the value for the purpose of tax. Service tax is liable to be paid by the builder/developer on the construction service' involved in the flats to be given to the land owner, at the time when the possession or right in the property of the said flats are transferred to the land owner by entering into a conveyance deed or similar instrument(eg. allotment letter). [Analysis] 
According to this clarification, service tax in respect of services provided to the landowner should be paid at the time of handing over his portion of the flats. This is contrary to the provisions of the Point of Taxation Rules, 2011, for the period after introduction of the said Rules, according to which the ST has to be paid as per the provisions of the said Rules, applicable for continuous supply of services. Once the developmental right is given to the builder, the liability to pay ST will arise.
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