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No service tax on conversion of plots

Comments Off on No service tax on conversion of plots   |   February 11, 2014    11:52am   |Contributed by manoja

Central Excise Commissioner waives Rs 24.34 crore tax, affected plot owners hail decision

Tribune News Service

Chandigarh, February 6
In a relief to the converted plot holders in Industrial Area, Phase I, and Phase II, the Commissioner, Customs and Central Excise Department, has ruled that there will be not service tax on conversion of plots.

This order will imply on those who have converted their plots from industrial to commercial.

Besides, the Commissioner has also waived Rs 24.34 crore service tax. A show-cause notice for the service tax was issued to the UT Estate Office in July 2013 for not depositing service tax.

The department had issued notice of Rs 34.31 crore but the Estate Office will now have to pay Rs 9.97 crore as service tax for ground rent, tower fee and rent income.

After receiving the notice, the UT Estate Office had asked the plot owners to pay service tax or face cancellation of allotment of their properties in September 2013.

The UT Administration had asked the plot owners to pay service tax from June 1, 2007, on the conversion fee for change of trade or activities from industrial to commercial.

The plot owners challenged the notice and filed an appeal before the Commissioner, Customs and Central Excise Department.

The order reads: “Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities.”

Chander Verma, chairman of the Converted Plot Owners’ Association, said the conversion of plots was not a service and they had submitted the same point before the Commissioner. “We hail the order and also the efforts of the Estate Office officials to pursue the case before the Commissioner,” he added.

Arvinder Pal Singh, president of the Hotel and Restaurant Association, Chandigarh, has also welcomed the order.

Estate Office notice

The notice issued in September 2013, reads: “All owners of converted plots are requested to pay service tax and interest with effect from June 1, 2007, to avoid the cancellation of allotment of their properties. No other individual demand notices will be served.”

News Published Under:   Chandigarh | Comments Off on No service tax on conversion of plots



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