Applicability of service tax

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2012 Is Service Tax applicable if Agreement of Sale is prepared before Completion Certificate & the same is Registered & the required Stamp Duty is paid after the builder has obtained the Completion Certificate??

@VaibhavJ

@VaibhavJ (Expert)
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31 December 2012 Hi,

As per Transfer of Property Act, property got transferred to you when either of 2 event takes place:

Payment towards property, Transfer of ownership by handing over keys or Execution of Agreement.

So in your case sale has taken place before obtaining Completion certificate & ST is payable.

To avoid liability you could revise agreement if same is not registered.

Thanks!!

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Arun Gulati

Arun Gulati (Expert)
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31 December 2012 In my view, you are not liable to pay service tax as entire consideration is received after obtaining the completion certificate, which is clear from that provisions that “construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority". Thus, you have only entered the agreement to sell before completion certificate but received the entire payment after completion certificate.