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e) In order to provide a mechanism for valuation of works contract service where value of land is involved in the gross amount charged for services provided Rule 2A of Service Tax Valuation Rules, 2006 was amended, vide Finance Act, 2017, retrospectively to be effective from 1/7/2010 deducting the value of land to determine the value of service involved in the works contract.

f) Services of construction of complex, building or civil structure or part thereof cannot be valued as per Rule 2A of valuation Rules. 2006 which specifically deals with the valuation of Work Contract Service, and in absence of valuation provisions to ascertain the value of services involved "construction of complex service" demand to levy Service Tax under this category cannot be upheld.

(ii) For the purposes of Article 366(29A)(b), in a building contract or any contract to do construction, if the developer has received or is entitled to receive valuable consideration, the above three things are fully met. It is so because in the performance of a contract for construction of building, the goods (chattels) like cement, concrete, steel, bricks, etc. are intended to be incorporated in the structure and even though they lost their identity as goods but this factor does not prevent them from being goods.
(iii) Where a contract comprises of both a works contract and a transfer of immovable property, such contract does not denude it of its character as works contract. The term "works contract" in Article 366(29A)(b) takes within its fold all genre of works contract and is not restricted to one specie of contract to provide for labour and services alone.

Nothing in Article 366(29A)(b) limits the term "works contract".

(iv) Building contracts are species of the works contract.

(v) A contract may involve both a contract of work and labour and a contract for sale. In such composite contract, the distinction between contract for sale of goods and contract for work (or service) is virtually diminished.

117.The submission of Mr. K.N. Bhat that the view in Raheja Development (supra) that when a completed building is sold, there is no work contract and, therefore, no liability to tax is not correct statement of law, does not appeal to us. If at the time of construction and until the construction was completed, there was no contract for construction of the building with the flat purchaser, the 22 ST/85124,85364/2015 goods used in the construction cannot be deemed to have been sold by the builder since at that time there is no purchaser. That the building is intended for sale ultimately after construction does not make any difference."