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Service tax applicable for the construction of complexes

Service Tax (Legacy) 674 views 1 replies

Hi, I bought a flat in 2007 which is under construction currently and possession is expected by Mid 2013. There were four payment which were to be paid prior to 1st July2010 and one payment was supposed to be made in Sept’10. Somehow I could not able to make the payment timely and I made all the five payments in Nov’10. Builder is now asking to pay service tax on all the five payments since the payment is made after 1st July’10.

I tried to refer to the recent Service Tax Circular - Circular No. 151 /2 /2012-ST (F.No.332/13 /2011-TRU) dated 10th Feb’ 2012 which clearly states that the construction service provided by the builder/developer prior to 1st July’10 will not be taxable. Therefore the ST should only be applicable on one payment which was due in Sept'10.

I would like to have your expert opinion on this matter. Is the Service tax applicable on the payments where the demand was raised before 1-July-10 and supposed to be paid before 1st July’10 but the payment was made post 1-July-10 ?

Regards,

Shobhit

Replies (1)

If the builder had raised a bill of your 4 installments before 01/07/2010, then in that case no Service tax would be applicable on it even if payment is made on or after 01/07/2010.
Or if you have entered into agreement of sale (Banakhat) which states that you were required to pay 4 installments prior to 01/07/2010, then no service tax will be applicable on the amount which was sue but not paid prior to 01/07/2010.
To sumup, you need a documentary proof that you were required to pay that amount & the payment was due before 01/07/2010, but paid on or after 01/07/2010.


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