Joint Lessee Developer

There are joint development agreements, redevelopment agreements, separate agreement for undivided share of land and FSI built and sold, among other arrangements in mass residential construction and sales.

Few of these areas are well settled in service tax point of taxation, value and rate including exemptions.

In Ulwe CIDCO leased a multistorey residential plot to an allottee through its tendering process. Few years later the lessee claimed lack of resources to be able to construct and execute the building.

In came a developer with all resources and commitment, but not on a joint agreement. CIDCO revised their original agreement for the plot with 2 lessees in 50:50 clearly placing development responsibility on the second lessee.

Both lessees sold their share of FSI between commencement certificate date and occupancy certificate date. But service tax department demanded all taxes due for the second lessee and awarded adjudication order on them. 

With valid grounds of appeal backed up sales ledgers, 26AS, etc; the demand was reduced to a mere 30% of adjudicated demand.