Does service tax apply to payment in foreign exchange?

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: under the advance ruling mechanism. The AAR shall not allow an application where the question raised is already pending in the applicant’s case before the authorities or at an appellate level the same as in a matter already decided by the tribunal or a court. An applicant for AAR purposes can include any of the following persons:

* A non-resident setting up a joint venture in India in collaboration with a non-resident or resident

* A resident setting up a joint venture in India with a non-resident

* A wholly-owned subsidiary Indian company of which the holding company is foreign

* A joint venture in India

* A resident, as the central government may specify.

Advance rulings, concerning service tax matters, can be sought in respect of:

* Classification of any service as a taxable service

* The valuation of taxable services for charging service tax

* The applicability of exemption notifications

* Admissibility of credit of service tax

* Liability to pay service tax.

An individual proposes to enter into an agreement with a contractor for civil construction of a residential property in Gurgaon. The residential property being constructed is for personal use. Will service tax be applicable on the construction of the property?

The following taxable service categories are relevant for determination of the service tax applicability on construction of a residential property:

* Construction of complex service (including construction of a new residential complex)

* Works contract service (including transfer of property in goods involved in execution of a contract for construction of a new ‘residential complex’)

The term ‘residential complex’ has been defined in the service-tax legislation as ‘any complex comprising of a building or buildings having more than twelve residential units, a common area’.

Since, in the present case, the residential complex constructed would be a single unit, the same would not qualify as a ‘residential complex’ as taxable either under ‘construction of complex service’ or ‘works contract service’. Hence, civil construction of a single residential property will not attract service tax.