Punjab and Haryana High Court in the case of G.S. Promoters v. Union of India reported in MIT-2010-574-HC] upheld the constitutionality of the levy of service tax on the deemed service while selling residential complex by builder to buyer.
Amendment made vide Finance Act 2010 in relation to construction of complex service
An Explanation was added to the definition of taxable service of ‘construction of complex service’ whereby construction of a residential complex intended for sale by the builder before or during or after construction is deemed to be a service provided by the builder to the buyer;
No service tax is leviable if entire payment for the property is paid by the buyer after completion of the construction evidenced by the certification by the local authorities;
Thus service tax has been levied on any construction of residential complex where consideration is received prior to obtaining completion certificate by creating a deeming fiction.
The Bombay High Court had granted an interim protection to the petitioners in a similar petition challenging the constitutional validity, by staying recovery of service tax