U/s 65 (105)(zzzh) Construction of Residential Complex Service.

Assesees has to find the optimum Liability (Least) from the following available options:

1.If Cenvat credit taken on inputs/Capital goods/input services.

2. If avails Notification 12/2003-ST.

3. If Abatement @ 75% when Gross Amount include Value of Materials And Land

4. If Abatement @ 67% when Gross Amount include Value of Materials BUT NOT Land

Abatements shall not apply if the following is availed:

1. Cenvat credit on inputs/Capital goods/input services.

2. Service Provider availed benefit of exemption U/n 12/2003-ST.( in respect of value of goods and materials sold by him to the service recipient )

Quantum of Abatements if Gross amount Charged included:

                        1. Value of Materials And Land: Abatement @ 75%.

                        2. Value of Materials BUT NOT Land:  Abatement @ 67%.

Illustration:

Ms Abbat Constructions Mumbai has the following details                            Particulars                                                                             Rs in Lakhs

1. Value of Land used for Building apartment                                    50000

2.  Value of the apartment ( Inc: Service & Inputs )                           120000

            ( Service - 50000 , Inputs - 70000)

                        Total                                                                            170000

Costs Incurred for Ms Abbat:

1. Value of Excisable inputs used                                                       60000

2. Value of Specific Capital goods used                                             15000

3. Value of Input services used                                                          10000

Excise duty @ 8.24% and Service Tax @ 10.3% extra

                                                           

Selection of the optimum Liability:

Step 1

If Cenvat credit taken on inputs / Capital goods /

input services.

Value of Apartment (Gross amount charged)                                    120000

Service Tax  Liability @10.3%                                                           12360

Less: Cenvat credit Taken on

            1. Inputs 60000 @ 8.24%                                                       4944

            2. Capital Goods 15000 @ 8.24% (100% taken)                   1236

            3. Input Services 10000 @ 10.3%                                          1030   

            Service tax payable                                                              5150

Step 2

If Service Provider avails benefit of exemption

U/n 12/2003-ST

Value of Services (Gross amount charged)                                       50000

Service Tax Liability @10.3%                                                                        5150

Less: Cenvat credit Taken on

            1. Inputs 60000 @ 8.24%( Not Available U/n 12/2003)          Nil

            2. Capital Goods 15000 @ 8.24% (100% taken)                   1236

            3. Input Services 10000 @ 10.3%                                          1030   

            Service tax payable                                                              2884

Step 3

If Abatement @75% - when Gross Amount include

Value of Materials And Land

Total Value (Gross amount charged)                                                 170000

Less:    Abatement @75%                                                                  127500

            Taxable Value                                                                         42500

             Service tax payable @ 10.3%                                             4378

Step 4

If Abatement @ 67% - when Gross Amount include Value

of Materials BUT NOT Land

Total Value (Gross amount charged)                                                 120000

Less:    Abatement @ 67%                                                                 80400

            Taxable Value                                                                         39600

             Service tax payable @ 10.3%                                             4079

Summary Analysis:

Option	Cenvat Credit	12/2003 ST	Abetment	Abetment
	Taken	Availed	67%	75%
Service Tax Payable	5150	2884	4378	4079

It shall be concluded that Availing Notification no 12/2003 ST is the best option in the case of Ms Abbat Constructions Mumbai