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PNP 30 WP1456-19.1.sxw

30. Parliament, in bringing about the amendment in question has made a legislative assessment to the effect that a service is rendered by builders to buyers during the course of construction activities. In our view, that legislative assessment does not impinge upon the constitutional validity of the tax once, the true nature and character of the tax is held not to fall within the scope of Entry 49 of List II. So long as the tax does not fall within any head of legislative power reserved to the States, the tax must of necessity fall within the legislative competence of Parliament. This is a settled principle of law, since the residuary power to legislate on a field of legislation which does not fall within the exclusive domain of the States is vested in Parliament under Article 248 read with Entry 97 of List I. However, it would be necessary for the Court to advert to the reply which has been filed on behalf of the Union of India in these proceedings. In paragraph 4 of the affidavit in reply it has been stated that service tax has been levied on account of the activity involving a value addition such as activities undertaken by an architect in designing a building, by civil contractors and engineers in constructing the building and in the provision of other utility services. A sample flat on site is normally made to enable prospective purchasers to envisage the final product. Choices are offered to buyers in respect of flat designs, internal shifting of walls, flooring patterns, wall colours, types of materials used for interior decoration, electrical and plumbing etc. These are also modified and personalized to suit the requirements of the buyer. Value additions and services are provided by developers to buyers when a prospective purchaser purchases a flat or unit before a completion PNP 31 WP1456-19.1.sxw certificate is obtained. The attention of the Court has also been drawn to the United Nations classification of products and services in which construction services are specifically delineated in Section 5. There is no traverse on the part of the Petitioners of the statements which are contained in the affidavit in reply in which there is a reference to the nature of services rendered by builders to buyers.